According to the SEC’s complaint, Daniel Rudden and a group of companies operating under the name Financial Visions — which issued promissory notes to fund its operations in short-term financing for funeral services and related expenses — defrauded investors after promising them annual returns of 12% or more.
Financial Visions was formed in or around 2001 to offer life insurance assignments to family members of deceased individuals to pay for funeral expenses before the payout of the decedent’s life insurance policy.
The companies’ purported business of “life insurance assignments” involved financing funeral and related expenses in exchange for repayment of those expenses plus a 5% fee secured by a decedent’s life insurance policy, according to the SEC.
The complaint alleges that since 2010 or 2011, Rudden used new investor funds to pay interest and redemptions to existing investors and concealed the Financial Visions companies’ true financial performance and condition.
The complaint also alleges that Rudden continued to represent the business as successful to existing and prospective investors when he knew that he was running a Ponzi scheme.
For example, when the Financial Visions Companies ceased making interest payments to investors, Rudden sent an email to investors representing that this was because of a large capital call due to an “inordinate number of deaths of our investor group (12 people with over $2,000,000 invested).”
In or around July 2018, Rudden admitted in an email that the Financial Visions Companies had operated as Ponzi scheme since 2010 or 2011.
“I have no defense. I made a conscious choice along the way to keep taking money to keep interest current. At that point, it became a Ponzi,” he said in the email.
The SEC, which obtained an emergency asset freeze and other relief, seeks permanent injunctions, disgorgement plus prejudgment interest, and penalties.
The SEC also named three entities as relief defendants, which the SEC alleges were controlled by Rudden and received investor funds from the alleged Ponzi scheme.
Galvin Charges Advisor With Misleading Customers About His Disciplinary History
Secretary of State William Galvin, Massachusetts’ top securities regulator, charged a registered broker-dealer and investment adviser representative with disseminating false information on his website to clients and prospective clients.
Alan Siegel, whose customers are primarily retirees or those approaching retirement, made statements on his website regarding his disciplinary record in the securities industry that were demonstrably false.
According to the administrative complaint filed by Galvin’s Securities Division, Siegel had for years published a statement on his website under the heading “Reliability Report” which stated that he had never had a complaint filed against him with any company, organization or regulatory agency. Siegel went as far as drawing the reader’s attention to the word “never” by writing it in all capital letters and underlining it.
In fact, Siegel has had three complaints filed against him by customers who alleged hundreds of thousands of dollars in damages, according to his BrokerCheck record, which also says he was accused of shoplifting a pair of sneakers in 1970, when he was 17. He said in response that he had little memory of the incident and didn’t recall being charged.
Siegel’s employer, G.A. Repple & Co., was also charged in the complaint with failure to supervise its agent.
The complaint states that G.A. Repple & Co. failed to provide meaningful review and oversight of Siegel and his website, simply rubber-stamping the content. G.A. Repple was well aware of the complaints against Siegel, having paid for settlements with customers who had accused Siegel of breach of fiduciary duty, selling unsuitable investments and failure to disclose material information.
Galvin’s office is seeking a cease and desist order, censure, sanctions and an administrative fine on both Siegel and G.A. Repple.
Former Trader Agrees to Settle With SEC in $1.1 Million Insider Trading Scheme
The SEC charged a former professional trader with allegedly participating in a serial insider trading scheme with an investment banker and his father that generated $1.1 million in illicit profits.
According to the SEC’s complaint, Robert Stewart recruited his friend Richard Cunniffe, a professional trader, to place trades based on inside information that Stewart received from his son Sean Stewart, an investment banker.
Cunniffe used the information to place trades in his own accounts and generated approximately $1.1 million in illicit proceeds which he shared with Robert Stewart, the SEC says.
The SEC’s complaint charges Cunniffe with violating antifraud provisions of the federal securities laws.
Cunniffe, who cooperated in the investigation and previously pleaded guilty to criminal charges, agreed to settle the SEC’s civil charges against him. The settlement, which is subject to court approval, orders injunctive relief, disgorgement and interest, but no penalty.
The SEC barred Cunniffe from the securities industry based on his guilty plea.