Investment Advisors In The News - Law Offices of Robert Wayne Pearce

Apr 9, 2025

Investors Nationwide Beware – Advisers Might Be Lying to You about Their Credentials!

The Securities and Exchange Commission (SEC) is actively reviewing advisers’ ADV forms for suspect information used to falsely tout investment expertise. Some of the areas the SEC will be looking at are education, business, and charters/certifications. The credentials listed will be sent out for accuracy – background checks will be performed on an individual’s suspect information. The SEC is also using the internet and other filings to verify a registered individual’s background information.

Apr 9, 2025

SEC Charges Nikolai Battoo of BC Capital Group with Exaggerating Asset Values and Concealing Client Losses

The Securities and Exchange Commission (SEC) announced an emergency action against Nikolai Battoo, an asset manager with BC Capital Group who touted extraordinary investment success during the financial crisis while purportedly exaggerating the amount of assets he manages and concealing major investor losses. According to the SEC’s investigations, Mr. Battoo claims to manage $1.5 billion for clients from around the world, including $100 million for clients in the United States. Despite Mr. Battoo’s declared track record of extraordinary returns for his clients, he suffered losses in 2008 because of his investments in the Bernard Madoff Ponzi scheme and a derivative investment program that went sour.

Apr 9, 2025

GenSpring in the Hot-Seat for Hedge Funds Sold as Conservative Bond Alternatives

Hedge funds are similar to mutual funds in structure. Investor money is pooled together and invested in an effort to make a positive return. However, hedge funds have more flexible investment strategies than mutual funds. Hedge funds seek to profit in all kinds of markets by utilizing strategies involving leverage, short-selling, and other speculative investment practices that are not typically used by mutual funds. Another factor that distinguishes hedge funds from mutual funds is that hedge funds are not subject to the same regulations designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge funds may not be required to file reports with the SEC. Fortunately, hedge funds are subject to the same prohibitions against fraud as are other market participants. In addition, managers owe a fiduciary duty to the funds under management.

May 18, 2016

Watch Out Investors—FINRA May Not Be Protecting You from Unscrupulous Brokers

Investors often hire a financial advisor to manage their money professionally because they lack the knowledge themselves and trust that their advisor will act in their best interest and uphold the industry rules and regulations set forth by the Financial Industry Regulatory Authority (FINRA), lest they be disciplined or even barred from the financial industry. Unfortunately, as Senator Elizabeth Warren (D-Mass) writes in a letter she and Sen. Tom Cotton (R-Ark) sent to the chairman of FINRA, Richard G. Ketchum, “…FINRA is not doing nearly enough to fulfill its investor protection mission.” A recent study of data from FINRA’s BrokerCheck database, conducted by the National Bureau of Economic Research (NBER), concluded that financial advisor misconduct is “broader than a few heavily publicized scandals” and that “one in thirteen financial advisers have a misconduct-related disclosure on their record” (See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2739170). Financial advisor misconduct disclosures include such things as bribery, forgery, and fraud. The NBER study noted that only about half of the advisors who committed misconduct lost their job and 44% of those obtained a job at a different broker dealer within one year. One of the more disturbing findings of the NBER study is that approximately one-third of all financial advisors with misconduct records are repeat offenders.

Dec 28, 2015

Capitol Securities Management Fined for Supervisory Failures

Capitol Securities Management, Inc. (CSM) of Glen Allen, Virginia submitted a Letter of Acceptance, Waiver and Consent to the Financial Industry Regulatory Authority (FINRA) for several alleged supervisory failures and unsuitable purchases of Reverse Convertible Notes (RCN’s). CSM has been a FINRA member since 1985 and has over 60 branch offices including its main headquarters in Glen Allen, Virginia. FINRA found, between January 2008 and August 2011, a registered representative for CSM recommended and executed 24 unsuitable purchases of customizable RCN’s totally approximately $4 million. FINRA alleged that the eight clients affected were not suitable candidates for these RCN purchases due to their risk tolerance, age, and financial experience. By executing these transactions, CSM, through a registered representative, failed to maintain and enforce proper supervisory procedures.

Jun 10, 2015

SEC Charges ClearPath Wealth Management and Owner With Fraud

The Securities and Exchange Commission (SEC) has filed a suit against Patrick Churchville, and his firm ClearPath Wealth Management (“ClearPath Wealth”) misappropriated and misused his investors’ cash and assets through a fraudulent scheme involving theft that was covered up by false accounting entries, shadow accounts, and misrepresentations to his investors, financial institutions, to third-party administrators, and to ClearPath Wealth’s auditors and accountants. According to the SEC, Mr. Churchville and his firm, ClearPath Wealth, caused over $11 million in losses to investors of the funds they advised and controlled. The SEC alleged that the defendants misallocated and misappropriated investor assets as part of a Ponzi-like scheme. According to the SEC, the defendants took monies that were due to be distributed to particular investors to pay for new investments to fund distributions to unrelated investors and themselves. The SEC alleged that Mr. Churchville’s home overlooking Narragansett Bay was bought with approximately $2.5 million stolen from investors.

Jun 8, 2015

Complaint Filed by the SEC for Fraudulent Life Settlement Investments

According to the U.S. Securities and Exchange Commission (SEC), from February 2012 through January 2014, Christopher A. Novinger and Brady J. Speers, and their company NFS Group, LLC d/b/a Novers Financial (collectively the “Defendants”) fraudulently offered and sold life settlement interests. In so doing, the SEC claims that Mr. Novinger and Mr. Speers made false and misleading representations to prospective investors about their purported business experience and financial expertise and that the Defendants misrepresented the investments. The SEC alleged that Mr. Novinger and Mr. Speers also constructed fake, meaningless titles for themselves to make investors believe that they were experienced and sophisticated financial advisers. The SEC alleged that Mr. Novinger and Mr. Speers used terms such as “licensed financial consultant,” “licensed consultant,” and “licensed financial strategist” toward that end. In truth, they had no training relating to securities and non-insurance related financial products, including life settlements. The SEC also alleged that the Defendants told investors that the life settlement investments were “safe,” “risk free,” “safe as CDs,” “the most secure, safe method for growing funds,” “federally insured,” and finally comprised of “polices insured with large, A-rated companies and backed by Federal Reserves.”

Jun 7, 2015

SEC Files Prime Bank Fraud Lawsuit

According to a recent suit filed by the U.S. Securities and Exchange Commission (SEC), Thomas G. Ellis and Yasuo Oda, through their company, North Star Finance LLC, Thomas H. Vetter, and Michael K. Martin and Sharon L. Salinas, through their companies, Capital Source Lending LLC and Capital Source Funding LLC (collectively the “Defendants”) allegedly engaged in a “prime bank” fraud scheme. These schemes generally involve the purported trading and or use of financial instruments affiliated with international banking institutions or other sources. In this case, the Defendants allegedly lured investors into complicated transactions involving bank guarantees and other financial instruments that would supposedly generate millions of dollars in profits for them. The SEC alleged that North Star and Capital Source collected approximately $5 million from defrauded investors and that the Defendants used the investors’ money for their own personal benefit. The SEC claims the investment programs were fictitious and the Defendants never obtained or “monetized” international bank investments to secure funding as guaranteed.

Jan 28, 2015

Gold Coast Bullion and Anthony Lauria Ordered to Pay CFTC Nearly $10 Million for Precious Metals Fraud

The U.S. Commodity Futures Trading Commission (CFTC) has ordered Florida resident Anthony Lauria and his Fort Lauderdale, Florida based company, Gold Coast Bullion, Inc., to pay nearly $10 million for committing illegal off-exchange precious metals fraud. The CFTC Order states that Gold Coast Bullion used telemarketers to solicit customers to invest in financed precious metals transactions. According to the CFTC Order, Anthony Lauria and the Gold Coast Bullion telemarketers represented to investors that in order to purchase the precious metals, they needed to deposit about 25% of the total metal value, that Gold Coast Bullion would arrange for the investor to receive a loan for the remaining 75%, and the investor would pay a finance charge on the loan.