TAG | violating anitfraud provisions of securities laws
INVESTMENT ADVISER, FUND MANAGER, AND TWO INDIVIDUALS WITH CHARGED BY SEC WITH SECURITIES FRAUD INVOLVING CLIENT FUNDS
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Recently on the US Securities and Exchange Commission’s website, they announced the filing of a civil injunctive action in U.S. District Court in Los Angeles, California against MAM Wealth Management, LLC (MAM), MAMW Real Estate General Partner, LLC (MAMW), Alex Martinez and Ralph Sanchez, alleging fraud in connection with client investments in a $10.3 million risky real estate venture.
According to the Commission’s complaint, from July 2007 through March 2009, Martinez, a MAM and MAMW principal, and Ralph Sanchez, a MAM registered representative and MAMW principal, had 50 of their advisory clients invest in MAM Wealth Management Real Estate Fund, LLC (Fund). The complaint alleges that Martinez and Sanchez misrepresented to some clients that the Fund was a safe, relatively liquid investment, was earning 9% per year, and would show profits in three years. The complaint alleges that they used their discretionary authority over other clients’ funds to invest them in the Fund, even though it was unsuitable for their conservative investment goals. The complaint alleges that many accounts were retirement accounts and that the Fund was an unsuitable investment for clients who did not have the ability and willingness to accept the risks of losing their entire investment. The complaint further alleges that the defendants caused the Fund to use client funds to make risky mortgage loans.
On the U.S. Securities and Exchange Commission’s website they write that there was a complaint alleging that the defendants have violated the antifraud provisions of the federal securities laws, including violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by MAM, MAMW, Martinez and Sanchez and Sections 206(1) and 206(2) of the Investment Advisers Act by MAM and Martinez and aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act by Sanchez. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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It was announced 0n March 21, 2011, on the SEC’s website that the SEC obtained an emergency court order freezing the assets of Urbana, Illinois money manager Timothy J. Roth for stealing more than $6 million of his clients’ mutual fund shares, liquidating the shares, and sending the ill-gotten gains to various accounts and companies under his control. The Court also entered a temporary restraining order prohibiting Roth from violating the anti-fraud provisions of the federal securities laws.
According to the SEC article, there was a civil complaint filed by the SEC. Roth worked for Comprehensive Capital Management, Inc. (“CCM”), a New Jersey-based registered investment adviser. The SEC’s complaint alleges that from October 2010 through February 2011, Roth stole more than $6 million worth of mutual fund shares from several employee deferred compensation plans for whom he provided investment advice.
The SEC complaint alleges that Roth, who worked out of CCM’s office near Urbana, Illinois, secretly caused the Plans’ mutual fund shares to be transferred to an account under his control, even though no such transfer had been requested or authorized by the Plans or the Plans’ participants. The SEC alleges that after selling the Plans’ shares, Roth funneled the cash proceeds to various accounts and companies under his control or for his benefit. According to the SEC’s complaint, at the time he was engaging in his scheme, Roth did not tell the Plans or their participants about the transfers. Instead, Roth sent them bogus account statements that deliberately omitted his surreptitious transfer of the mutual fund shares. Thus, the account statements overstated the Plans’ account holdings and concealed Roth’s theft.
In the SEC article they go on to say that the SEC’s complaint charges Roth with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and with aiding and abetting violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2 thereunder. In addition to the emergency relief already obtained, the complaint seeks preliminary and permanent injunctions, disgorgement, and civil penalties from Roth. The SEC’s complaint also names Roth’s companies as relief defendants and seeks disgorgement from them. The Court’s freeze order extends to the assets of the relief defendants. A hearing on the SEC’s motion for preliminary injunction has been set for 1:00 p.m. on March 30, 2011, at the U.S. District Court for the Central District of Illinois courthouse in Peoria, Illinois before Judge Michael M. Mihm.
This article was obtained on the SEC’s website.
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