SEC headquarters in Washington. (Photo: National Law Journal)

The Securities and Exchange Commission recently barred a former registered investment advisor and fund manager for multiple breaches of fiduciary duty and violations of anti-fraud provisions related to advice made to elderly clients.

The SEC barred Laurence Isaac Balter of Oracle Investment Research from the industry and ordered him to pay $550,000 for fiduciary duty breaches including failure to observe the fund’s investment limitations. He was advisor to the Oracle Mutual Fund and between 100 and 120 separate accounts.

According to the complaint, Balter engaged in three distinct violations:

  • Fraudulently allocated profitable trades to his own accounts to the detriment of several client accounts.
  • Falsely told his SMA clients who invested in the fund (the Oracle Mutual Fund) that they would not pay both advisory fees and Fund management fees for the portions of their accounts invested in the fund.
  • Made trades for the fund that deviated from two of its fundamental investment limitations.

Together, the complaint states, “the violations caused significant harm to Balter’s clients.”

Balter managed the Oracle Mutual Fund, in which he invested the majority of his separately managed account clients.

The majority of Balter’s advisory clients were individual investors, many of whom were older than 60, retired or nearing retirement, and unsophisticated investors with little investment experience.

Clients were generally charged an annual fee of 1.50% to 1.70% of assets under management. Balter used a buy-and-hold strategy for most of his advisory clients and primarily invested those clients in large-cap securities and in the fund.

The complaint states he violated policies, including the fund’s status as “diversified,” as described in the registration statement and as disclosed to the fund’s Board of Directors.

The SEC charges that he cherry-picked trades for his personal benefit to the detriment of clients, and cites violations of the anti-fraud provisions of the Exchange Act, the Advisers Act and the Investment Company Act.

— Check out FINRA to Protect Senior Investors With 2 New Rules on ThinkAdvisor.