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Regulation and Compliance > Federal Regulation > SEC

Rogue advisors on parade

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The Securities and Exchange Commission charged a Virginia broker with defrauding elderly customers, including some who are legally blind, by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.

According to the SEC’s complaint, the broker siphoned $730,289 from elderly customers and used the money to pay for such personal expenses as vacations, vehicles, clothes, and a country club membership.

She ensured that the customers received their monthly account statements electronically, knowing they were unable or unwilling to access their statements in that format. 

The SEC further alleges that the broker engaged in unauthorized trading and other financial transactions while making misrepresentations to customers about their investment accounts and forging brokerage, banking, and other documents.


The Securities and Exchange Commission also charged the owner of a Seattle-based investment advisory firm with fraudulently misusing client assets to make loans to himself to buy a luxury vacation home and refinance a rare vintage automobile. 

An SEC investigation found that the advisor used assets from the portfolio of a senior citizen client to fund $3.1 million in personal loans without telling her or obtaining her consent. The loans were not in the best interest of the client and significantly favored the advisor, who provided no collateral, had no set pay-off dates, and paid most of the interest at the prime rate (which banks typically provide their most credit-worthy customers). 

The advisor also improperly directed an investment fund managed by his firm to make more than $4.5 million in loans and investment purchases to facilitate personal real estate deals and fend off claims from disgruntled Lakeside Capital clients. He diverted more than $500,000 from the fund to pay settlements to disgruntled clients.


A major securities brokerage is pursuing more than $800,000 (its net loss) from a former advisor that it claims swindled nearly $1.5 million from a client with dementia. The brokerage asked a federal court to freeze the advisor’s assets and give it the ability to claim her assets.

According to the brokerage, the advisor begain diverting the client’s funds in 2013 and continued doing so through early 2014. The advisor and her husband allegedly used the money to buy two cars worth $87,000, diamonds worth $165,000, and appliances and home remodeling worth $146,000. They also used additional client money to pay down their debts.


Harry J. Lew is Chief Content Officer of the National Ethics Association (NEA). Since 2001, NEA (and its predecessor, the National Ethics Bureau) has helped over 25,000 business professionals enhance their reputation and build their businesses on a foundation of trust, ethics, and best practices. For more information on the benefits of membership, go to


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