Among recent enforcement actions by the Securities and Exchange Commission were a $1 million-plus court judgment against Sage Advisory Group and its principal as a result of two fraud cases and insider trading charges against four individuals.
Court Orders Advisor to Pay $1 Million in Two SEC Fraud Cases
Judge George O’Toole Jr. of the U.S. District Court for the District of Massachusetts has ordered Sage Advisory Group LLC and its principal, Benjamin Lee Grant, to pay a total of $1.05 million in two fraud cases brought by the SEC. In addition, Lee Grant has been permanently barred.
According to the agency, in the first case, which was filed in September 2010, Lee Grant was charged with fraudulently leading his brokerage customers to transfer their assets to Sage, his new advisory firm.
Prior to October 2005, Lee Grant was a registered representative of broker-dealer Wedbush Morgan Securities and had customer accounts of about $100 million in assets, nearly all of which were managed by California-based First Wilshire Securities Management. But in September 2005, Lee Grant resigned from Wedbush so he could run Sage.
When he did so, he lied to his customers and said that their accounts were being switched over to Sage at First Wilshire’s urging because First Wilshire was not willing to continue managing their assets if they stayed at Wedbush.
He also told customers that the “wrap fee” program being offered by Sage offered potential savings, based on historical commission costs. He didn’t tell them that the new arrangement, with a discount broker, would result in savings realized by Sage, not by the customers, under the wrap fee.
He also rushed them to sign up with Sage by suggesting that they might suffer disruption in First Wilshire’s management of their assets unless they signed and returned the new advisory and custodial account documents as soon as possible.
An August 2014 trial jury found both Sage and Lee Grant liable for fraud, among other charges.