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Day: April 9, 2019

Investment Adviser Sentenced to Over 7 Years in Prison

A financial adviser was sentenced to more than 7 years in prison and ordered to pay over $3 Million in restitution for misappropriating client funds by forging client signatures and altering account statements.  The SEC alleged that the defendant made 56 unauthorized withdrawals from client account over a five-year period.  The SEC also charged that the defendant lied to her firm and provided fake documentation to hide her activities.  The SEC charged her with violating the Advisers Act and with securities fraud.  The prison sentence arose from parallel criminal proceedings brought by the U.S. Attorney for the District of Massachusetts for wire fraud, investment adviser fraud, and aggravated identity theft.

Although the SEC does not have criminal prosecution powers, it has the discretion to refer matters to the U.S. Attorney once it uncovers securities wrongdoing.  If the DoJ can make a federal criminal case because of fraud or theft, an investment adviser can end up a guest of the state for several years.