A former American Portfolios Financial Services rep misappropriated at least $1.15 million from at least five customers of the Holbrook, New York-based broker-dealer, according to the Securities and Exchange Commission.
In a complaint filed Friday in the U.S. District Court for the Eastern District of Michigan, the SEC said Mark L. Hopkins told clients he was investing the senior citizens’ funds in a local credit union’s investment program. However, that investment program never existed and Hopkins was instead depositing the clients’ funds into an account he controlled at the credit union and misappropriating them.
American Portfolios discovered that Hopkins was accepting customer funds for an investment not on the books of the broker-dealer without obtaining pre-approval from the firm, according to a disclosure on the Financial Industry Regulatory Authority’s BrokerCheck website. The firm told him to return the money, according to the SEC complaint. “Funds were returned to [that] customer,” American Portfolios indicated in the disclosure on BrokerCheck.
American Portfolios also alleged that Hopkins failed to provide an update on his outside business activities and also failed to report a judgment against him, according to the disclosure on BrokerCheck, which noted the firm permitted him to resign. He was also barred from acting as a broker or associating with a BD firm, according to FINRA.
In a statement provided to ThinkAdvisor on Monday, American Portfolios said: “As a firm we fully cooperated with the SEC’s investigation into Mark Hopkins but cannot comment any further because the matter is still pending.”
Hopkins violated the antifraud provisions of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, according to the SEC.
The regulator is seeking injunctive relief, disgorgement of ill-gotten gains and prejudgment interest, as well as civil money penalties, it said.
Starting in at least 2017, Hopkins began approaching his brokerage customers about the bogus investment program at the credit union, according to the complaint.
In August 2017, Hopkins approached three of his brokerage customers about the alleged investment program: a married couple in their mid-60s and an individual investor who was 87 years old, according to the complaint. Those customers agreed to invest $250,000 and $500,000, respectively, in the bogus program, according to the SEC.