Rogue advisors on parade

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.

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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).