The Securities and Exchange Commission this week accused Santa Fe investment advisor David A. Nagler and his firm, New Line Capital LLC, of defrauding clients by making false and misleading fee disclosures and failing to divulge related conflicts of interest — breaching their fiduciary duties.
New Line and firm owner Nagler, 63, falsely disclosed they would “take care to assure” that New Line’s annual advisory fees would not exceed 2% of a client’s assets under management when they took no such steps and charged numerous clients more than that percentage, the SEC said.
The commission also alleges New Line and Nagler misled clients by saying New Line “may” offer hourly fee services. The firm actually provided such services without informing clients about the charges and without disclosing the financial conflicts of interest arising from charging those hourly fees, the SEC said, citing its civil complaint, filed Monday in the U.S. District Court for New Mexico.
New Line Capital is registered in New Mexico with about $29 million in assets under management, according to its most recent Form ADV, filed in 2021.
From April 5, 2019, through December 2024, Nagler and the firm charged advisory fees exceeding what they promised clients, and charged certain customers for “consulting” without their knowledge, breaching their fiduciary duties and defrauding New Line clients, the complaint alleges.
The SEC, which alleges Nagler and the firm violated anti-fraud provisions in the Investment Advisers Act of 1940, seeks injunctions, disgorgement of ill-gotten gains and civil penalties from both defendants.
Nagler was fired, or permitted to resign, from Smith Barney in 2005 for borrowing money from a client-friend without employer approval and from Morgan Stanley in 2006 for misrepresenting the reasons for his discharge from Smith Barney, according to SEC records.
The Financial Industry Regulatory Authority suspended him and imposed a $10,000 fine over these matters in 2007. Nagler said he did not know the loan was against the rules, that he had repaid the client with interest, and that he had disclosed the situation to Morgan Stanley 11 months before the firm terminated him, according to the SEC records.
In 2015, the SEC censured Nagler and imposed a $25,000 penalty, saying he had misrepresented where the firm was based to maintain SEC registration, overstated assets under management and failed to meet record-keeping requirements.
Nagler didn't immediately return a message left Friday at the phone number on a Form ADV.
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