On May 29, 2015, the Securities and Exchange Commission (SEC) announced that Judge George A. O’ Toole Jr. of the United States District Court for the District of Massachusetts entered Final Judgments against the former registered investment adviser Sage Advisory Group, LLC (Sage) and its principal Benjamin Lee grant, both of Boston MA, in two fraud cases.
In the first case, the Commission alleged that Benjamin Lee Grant (Lee Grant) fraudulently had his customers transfer their assets to Sage, his new advisory firm. According to the SEC, Mr. Grant made false and misleading statements to his previous member firm’s customers. He also allegedly misled customers by telling them that any changes in their accounts were being done at the suggestion of First Wilshire. The SEC alleged that in order to get his customers to sign up as advisory clients with Sage, Mr. Grant would falsely suggest that they might suffer disruption in First Wilshire’s management of their assets unless they signed and returned the new advisory and custodial account documents as soon as possible. In August 2014, a Federal District Court jury found Sage and Lee Grant liable for fraud under the Investment Advisers Act of 1940 along with other charges.
In the second case, the SEC alleged that Sage and Mr. Grant separately violated the antifraud provisions of the Investment Advisers Act. According to the SEC, Grants father, Jack Grant, violated a Commission bar from association with Sage and acting as an investment adviser. The prior bar had been based on a 1988 SEC enforcement action against Jack Grant, alleging that he sold $5,500,000 of unregistered securities and misappropriated funds. Both Lee Grant and his father failed to inform their advisory clients that Jack Grant was barred from associating with investment advisors.
The Final Judgment in the first case acknowledges the jury’s liability finding, imposes permanent injunctions against future violations of sections 206(1), 206(2), 206(4) and 204A of Investment Advisers Act and Rules 204A-1 and 206(4)-7, orders Sage and Lee Grant to pay on a joint and several basis $500,000 in disgorgement and $51,038 in prejudgment interest, and orders Lee Grant to pay an additional $350,000 civil penalty.
The Final Judgment in the second case imposes additional permanent injunctions against future violations of sections 206(1), 206(2), and 207 of the Investment Advisers Act, which orders Lee Grant to pay an additional $150,000 civil penalty.
Attorney Pearce began his career at the SEC as an enforcement attorney more than 40 years ago. His SEC defense law practice clients have included public companies and their officers and directors, broker-dealers, investment advisors, and individuals being investigated in connection with their personal securities transactions. He has broad, extensive experience in matters arising from alleged 10b-5 fraud violations including, “insider trading,” Section 16(b) “short swing profit,” and Section 14 “proxy rule” violations as well as Section 9 “market manipulation” cases.
Have you have been contacted by the SEC or believe that you may be subject of an investigation? If so, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends various entities and individuals who may be the subject of an SEC investigation or enforcement action regarding their alleged involvement in securities laws violations.
This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to representing investors and financial industry professionals throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.