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Regulation and Compliance > Litigation

DOJ, SEC Charge Ex-Advisor With Bilking 3 Older Clients

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What You Need to Know

  • The ex-broker allegedly took nearly $1 million between August 2017 and May 2021.
  • He was a broker from 2010 to 2013 with Morgan Stanley, which sued him over unpaid promissory notes.
  • He used the money to pay for luxury cars, vacations, private school tuition and a gold necklace, according to the SEC.

The U.S. Attorney’s Office for the Northern District of Illinois filed felony charges Tuesday against a former broker who allegedly defrauded at least three older clients out of over $950,000.

The DOJ’s complaint against Naseem Mohammed Salamah, 40, of Rockford, Illinois, filed in U.S. District Court for the Northern District of Illinois, alleged that, from at least as early as August 2017 and continuing to May 2021, he “knowingly devised, intended to devise, and participated in a scheme to defraud three of his clients.”

If convicted, Salamah will have to forfeit to the U.S. government any property derived from proceeds that can be traced to his fraud, including $968,582 and an 18-karat white gold necklace with a ruby, according to the complaint.

In a parallel action, the Securities and Exchange Commission filed a civil complaint against Salamah on Tuesday in the same court, making the same allegations.

Morgan Stanley Dispute

Salamah was a registered broker with Morgan Stanley from August 2010 to February 2013, according to according to his report on FINRA’s BrokerCheck website, which didn’t specify why he left the firm.

Morgan Stanley filed a complaint against Salamah in the same Illinois court on May 9, 2014, alleging he failed to pay the firm back for money owed on promissory notes despite a FINRA arbitration panel ordering him to pay Morgan Stanley $167,076 including interest, legal fees and other costs in September 2013.

Salamah has not been a registered broker with any FINRA-affiliated firms since leaving Morgan Stanley, according to BrokerCheck. But, from January 2013 to June 2021, Salamah was an investment advisor representative with a then state-registered investment advisor. He operated a branch office for the firm in Loves Park, Illinois and was the sole representative of the branch, according to the complaint.

The complaint did not name the firm but it is identified as NinePoint Advisors on his BrokerCheck report. On June 29, 2021, Salamah’s employment with that firm was terminated, according to the complaint, which does not state a reason for his dismissal.

Morgan Stanley declined to comment on Wednesday. Salamah and NinePoint Advisors did not immediately respond to requests for comment.

Stolen Funds Paid for Vacations, Luxury Cars

As alleged in the SEC complaint, Salamah chose the three clients as his victims because he did not think they would pay close attention to their brokerage account statements.

The complaint alleged he altered authorization forms and forged the signature of his firm’s chief compliance officer to transfer the clients’ funds to a bank account he controlled.

Salamah used the money for personal expenses, including vacations, luxury cars and private school tuition, the SEC alleged.

The SEC’s complaint charged Salamah with violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. The SEC seeks injunctive relief, disgorgement, prejudgment interest and civil penalties.