Articles Posted in SEC Actions

sec crest.bin.jpgOn February 14, 2012, the Securities and Exchange Commission (SEC) filed a complaint against Brenda Esbach of Tustin, California charging her with numerous securities fraud violations. The activity in question began while Brenda Esbach was employed as an investment advisor with Ameriprise Financial Services and continued after she left Ameriprise and began working with Aventine Investment Services, Inc. and Purshe Kaplan Sterling Investments.

The SEC’s complaint alleges that, instead of making investments as directed by her clients, Esbach misappropriated the funds using them to pay personal and business expenses, including private school tuition and trips to Las Vegas. Without admitting or denying the allegations, Esbach agreed to provide restitution to her victims in the amount of $2,561,873.

Esbach, who has also been the subject of several investor lawsuits and securities arbitration claims, is awaiting sentencing in a related Federal prosecution where she entered a guilty plea to one count of mail fraud and one count of money laundering back in September 2011.

Thumbnail image for Thumbnail image for sec crest.bin.jpgBarr M. Rosenberg, co-founder and chairman of Orinda, California, investment firm AXA Rosenberg agreed to pay $2.5 million to settle securities fraud charges that involved hiding a computer error that caused $217 million in losses to his clients. As part of the settlement, Rosenberg will also be banned from the securities industry His company, AXA Rosenberg, which is owned by french company AXA SA, has also agreed to pay $242 million to settle civil charges.

Thumbnail image for Thumbnail image for sec crest.bin.jpgToday, the Securities and Exchange Commission (SEC) announced the filing of a civil securities fraud lawsuit against Southern California wealth advisory firm MAM Wealth Management, LLC (MAM), MAMW Real Estate General Partner, LLC (MAMW), Alex Martinez and Ralph Sanchez. The action alleges securities fraud in connection with client investments of $10.3 million in a risky real estate investment. According to the complaint, from 2007 through 2009, Martinez and Sanchez advised 50 of their clients to invest in MAM Wealth Management Real Estate Fund, LLC (MAM Fund) and misrepresented that the MAM Fund was a safe and liquid investment with 9% annual earnings. Martinez and Sanchez are alleged to have used their discretionary authority over their clients’ accounts to invest in the MAM Fund despite its unsuitability for their conservative investment goals. Many of these client accounts were retirement accounts and the MAM fund was unsuitable for clients who were unable to accept the risk of losing their entire investment. According to the SEC, the defendants caused the MAM Fund to use client funds to make risky mortgage loans. In its action, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.

Thumbnail image for Thumbnail image for sec crest.bin.jpgToday, the Securities and Exchange Commission (SEC) filed securities fraud charges against Steven K. Kobayashi, a financial advisor working in the Walnut Creek, California, office of UBS Financial Services LLC. The SEC’s complaint alleges that Kobayashi raised several million dollars through a fund called “Life Settlement Partners LLC” that invested in life settlement policies. Kobayashi allegedly bilked customers out of $3.3 million dollars in a scheme where he misappropriated customer funds to support an extravagant lifestyle that included expensive automobiles, large gambling debts and prostitutes. Kobayashi agreed to settle the SEC’s charges against him without admitting or denying the allegations.

Thumbnail image for sec crest.bin.jpgToday, the San Francisco Regional Office of the Securities and Exchange Commission (SEC) levied securities fraud charges against local investment advisors responsible for managing the American Pegasus Auto Loan Fund, a $100 million hedge fund that invested in subprime automobile loans. The SEC found that American Pegasus LDG and American Pegasus Investment Management–together with CEO Benjamin P. Chui, former portfolio manager Triffany Mok and former general counsel Charles E. Hall, Jr.–engaged in improper self-dealing, conflicts of interest and misuse of funds. The respondents entered into a settlement with the SEC subject to the following sanctions: Benjamin Chui agreed to payment of a $175,000 fine and a 3-year bar from association with any investment advisory firm; Charles Hall agreed to payment of a $100,000 fine and a 3-year bar from association with any investment advisory firm; Triffany Mok agreed to payment of a $75,000 fine and a 1-year bar from association with any investment advisory firm; and the investment advisor firms agreed to forgive $850,000 in unpaid advisory fees owed to the firms by the fund.

Today, the Securities and Exchange Commission (SEC) filed a securities fraud lawsuit against Barbara Alexander, a syndicated radio talk show host based in Monterey, California, who hosted a show for entrepreneurs called MoneyDots. According to the SEC’s complaint filed in San Jose federal district court, Alexander and two other executives at APS Funding misappropriated $2.5 million dollars from investors who thought they were investing in short-term loans secured by real estate offering an annual yield of 12 percent. The SEC alleges that the High Yield Investment Program (HYIP) was nothing more than a Ponzi scheme where fictitious returns reported to investors really came from new investors rather than actual income earned. This year, the SEC, FBI and U.S. Attorney’s office have stepped up their efforts to punish those who commit securities fraud. As reported in a recent blog posting, the FBI has reported a 105% increase in high yield investment fraud investigations

See related Monterey Herald news article: “MoneyDots” Talk Show Host Freed

sec crest.bin.jpgSan Diego-based First Allied Securities has agreed to pay $1.95 million in a settlement with the Securities and Exchange Commission (SEC) relating to the firm’s failure to supervise the activities of former broker Harold Jaschke who was the subject of a related SEC action for churning, conducting unauthorized trades and giving unsuitable recommendations.

According to the SEC, Jaschke had engaged in a high-risk short-term treasury bond trading strategy for two municipalities who were his clients, the City of Kissimmee, Florida and the Tohopekaliga Water Authority. Jaschke reaped commissions of more than $14 million while trading for the two municipalities who had combined unrealized losses of approximately $60 million. When Jaschke’s unusual trading activity raised red flags and generated an exception report, First Allied did not follow its customary practice of sending the customer a “negative response letter” to notify them of the suspicious activity. As its name implies, a negative response letter does not require a response from the customer unless they want to question the activity. After a nine-month delay, the firm became concerned enough that it ultimately decided to send a “positive response letter,” which requires a written confirmation from the customer. However, according to the SEC’s order, First Allied’s letter failed to adequately alert the customers about the suspicious activity and falsely stated that the letter was being sent as part of First Allied’s “annual review” process. No one at the firm, other than Jaschke, spoke with the customers about the situation. The customers signed and returned the letter based on misinformation given to them by Jaschke.

First Allied terminated Harold Jaschke on August 13, 2008. The SEC’s action against him is still pending.

Thumbnail image for pyschic.jpgToday, the Securities and Exchange Commission (SEC) filed a securities fraud lawsuit against Sean David Morton of Manhattan Beach, California, alleging that Morton falsely claimed he would use his psychic expertise to provide investment guidance. The SEC also alleged that Morton lied to investors about his investing track record.

The SEC’s complaint includes a lengthy and detailed analysis showing that Morton’s predictions over the years have proven to be wildly inaccurate. Below are a few examples of the false claims that the SEC has accused Morton of making:

  • In his July 20,2006, newsletter Morton wrote: “I have called ALL the highs and lows of the market, giving EXACT DATES for rises and crashes over the last 14 years.”

Today, the Securities and Exchange Commission (SEC) filed a securities fraud lawsuit in Sacramento federal court charging two Sacramento-area men with the misappropriating approximately $10 million from over 100 investors who were falsely promised that the funds were safe, liquid, high-yield investments that were secured by deeds of trust. Charged in the complaint were Lawrence “Lee” Loomis, John Hagener, Loomis Wealth Solutions, LLC (“LWS”), and Lismar Financial Services, LLC.

The SEC has requested monetary penalties, disgorgement of ill-gotten gains and injunctive relief. Click here to download the SEC’s complaint.

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