Investment Adviser Ordered to Pay Civil Penalty for Defrauding Elderly Client

Investor Alerts Attorney Jared Levy September 15, 2020

A Colorado federal court recently entered a consent judgment against investment adviser Steven Rodemer relating to his alleged misappropriation of over $450,000 from an elderly client.

The SEC alleged that Rodemer was an investment adviser to an elderly, widowed client. According to the SEC’s complaint, Rodemer used his power of attorney over the client’s assets to write checks to himself and to his bank. Some of the checks allegedly also were used to cover expenses for his vacation home.

Rodemer also allegedly utilized the client’s debit/credit card to cover personal expenses and make ATM withdrawals, and paid his personal credit card bills from the client’s bank account. The SEC alleged that the client did not authorize any of these transactions, which totaled $451.889. The final judgment orders Rodemer to pay a civil penalty totaling $385,536.

Florida law prohibits exploitation of an elderly client, and victims may be entitled to treble damages (i.e., three times the amount of their damages) and attorney fees. If an investment advisor or stockbroker has abused their position of trust to take advantage of an elderly person, the securities attorneys at Morgan & Morgan’s Business Trial Group are here to help. Please contact us for a free case evaluation.

The Business Trial Group is part of the largest contingency law firm in the nation, with more than 550 lawyers and 50 offices. We have helped investors recover investment losses totaling tens of millions of dollars. We are only paid if we successfully recover money for you.

Recovery of Investment Losses in AllianzGI’s Structured Alpha Funds

Investor Alerts Attorney Jared Levy September 10, 2020

Morgan & Morgan’s securities attorneys are investigating claims involving losses in AllianzGI’s “Structured Alpha” funds.

Many of the Structured Alpha funds have suffered catastrophic losses this year, according to reports. AllianzGI has been accused of failing to use appropriate risk controls and hedging strategies to protect investors, even though AllianzGI touted the Structured Alpha funds’ ability to endure extreme market volatility.

For example, the offering documents for AllianzGI’s Structured Alpha US Equity 500 hedge fund state that the fund’s investment strategy was “designed to outperform whether equity markets are up or down, smooth or volatile.” In early 2020, AllianzGI allegedly told investors the fund was positioned well if an extreme correction occurred or volatility spiked, according to reports.

But when equity markets crashed in February and March, AllianzGI allegedly failed to properly re-balance or hedge positions. It also allegedly failed to reduce leverage.

AllianzGI’s failure to protect investors allegedly may have been due to the fund’s fee structure, as AllianzGI only earned fees if the fund out-performed the S&P 500. AllianzGI allegedly could have protected investors against a market correction earlier this year, but would have had to lock in small losses to do so. Incurring losses, however, may have meant that AllianzGI would not have been entitled to fees. So instead of paying for protective measures, AllianzGI allegedly crossed its fingers that markets would simply turn in the fund’s favor without having to pay for measures to reduce risk exposure.

AllianzGI’s alleged failure to take protective measures left the fund exposed to catastrophic losses. By late March, the fund allegedly had incurred losses of more than 75%, totaling over $900 million.

AllianzGI’s parent company, Allianz SE, recently disclosed that the SEC has sent an information request regarding the Structured Alpha funds.

If you have suffered losses relating to AllianzGI’s Structured Alpha funds, we are here to help. Our experienced securities attorneys in the Business Trial Group have helped investors recover tens of millions of dollars of investment losses.

Morgan & Morgan’s Business Trial Group helps investors recover their losses on a contingency basis. We are only paid if we successfully recover money for you. The Business Trial Group is part of the largest contingency law firm in the nation, with over 550 lawyers and 50 offices.

Business Trial Group Investigates $24M Ponzi Scheme Targeting African Immigrants

Investor Alerts Attorney Jared Levy September 8, 2020

The Business Trial Group is investigating an alleged $27 million fraudulent scheme that The Smart Partners LLC and 1st Million LLC perpetrated against more than 1,000 investors, most of whom were African immigrants. The Securities and Exchange Commission recently charged Smart Partners, 1st Million, and their principals (Dennis Jali, John Frimpong, and Arley Johnson) with violations of federal securities laws for operating an alleged Ponzi scheme.

According to the SEC’s complaint, the defendants touted risk-free investment returns ranging from 6 percent to 42 percent. They also misrepresented that they utilized licensed traders for foreign-exchange and cryptocurrency trading, the SEC alleges.

The SEC alleges that the defendants engaged in an affinity scheme by targeting African immigrants and emphasizing their common ancestry and religious affiliations to gain their trust. According to the SEC, one of the principals, Dennis Jali, told investors that he is a pastor, a self-made millionaire, and expert trader. He even rented office space to make it appear that his companies were legitimate, the SEC says.

However, as the SEC alleges, Jali and his companies were not legitimate. The defendants used investor moneys to fund their personal lifestyles and to pay earlier investors in a Ponzi-like fashion, according to the SEC.

According to Kelly L. Gibson, director of the SEC’s Philadelphia Regional Office, the defendants exploited religious affiliations and cultural affinities to gain investors’ trust.

“We encourage all investors to be on high alert whenever they are offered investments promising low risk and guaranteed returns, including from members of a trusted community,” Gibson said in a statement.

The SEC has charged the defendants with violating anti-fraud securities laws and seeks the return of investor moneys, injunctive relief, and civil penalties. The SEC also charged Access2Assets as a relief defendant, seeking the return of moneys from the alleged Ponzi scheme. In addition to the SEC’s action, the U.S. Attorney’s Office for the District of Maryland has filed criminal charges and the CFTC has filed a civil action.

If you have suffered losses relating to the alleged affinity-based scheme perpetrated by Smart Partners and 1st Million or a similar scheme, we are here to help. Contact the Business Trial Group for a free case evaluation. Our experienced attorneys have helped investors recover tens of millions of dollars of investment losses.

As part of the largest contingency law firm in the nation, the Business Trial Group is only paid if we successfully recover money for you.

Business Trial Group Investigates JP Morgan Volatility-Related ETP Losses

Investor Alerts Attorney Jared Levy August 31, 2020

The securities attorneys at Morgan & Morgan’s Business Trial Group are investigating investment losses in volatility-related exchanged traded products (ETPs) sold by JP Morgan Securities LLC and other brokerage firms.

FINRA recently entered into an Acceptance, Waiver, and Consent (AWC) settlement with JP Morgan, which requires the firm to pay over $650,000 in fines and restitution to customers for improper sales of volatility ETPs. The findings state that JP Morgan failed to ensure that its brokers and customers understood the risks of holding volatility ETPs for long periods of time. The findings also state that JP Morgan solicited customers (including those who did not have a high risk tolerance and did not want to invest aggressively) to purchase volatility ETPs, and those customers held them for a significant time and sustained losses. According to FINRA’s findings, JP Morgan failed to provide any training or guidance to its brokers or managers regarding volatility ETPs. The firm also failed to properly supervise sales of volatility ETPs.

Volatility measures the degree of variation in a particular instrument’s trading price over a certain time period. For example, when stock prices endure wild swings, volatility is high. In the past decade, many funds and trading strategies have been tied to volatility or the Volatility Index (VIX). When markets are relatively calm, volatility funds can provide attractive returns. But when volatility unexpectedly returns, volatility funds may experience heavy losses.

2020 has been marked by extreme volatility. This has caused many volatility ETPs to sustain heavy losses. If you were invested in a volatility fund, you may have suffered substantial losses. The securities attorneys at Morgan & Morgan’s Business Trial Group are here to help. Contact us for a free case review.

The Business Trial Group is part of the largest contingency law firm in the nation, with more than 500 lawyers and 50 offices. We have helped investors recover investment losses totaling tens of millions of dollars. We are only paid if we successfully recover money for you.