Philadelphia Advisor Confesses to Conducting $100 Million Scheme

Posted on September 21st, 2021 at 4:17 PM
Philadelphia Advisor Confesses to Conducting $100 Million Scheme

From the Desk of Jim Eccleston at Eccleston Law:

A Philadelphia-based investment advisor, Brenda Smith, has confessed to operating a $100 million securities fraud scheme. 

Smith has owned and operated Broad Reach Capital LP since February 2016, which is a pooled investment fund available to accredited investors requiring a minimum investment of $1 million, according to court documents. Smith allegedly informed clients between February 2016 and August 2019 that their funds would be pooled into Broad Reach Capital’s proprietary trading strategies, such as dividend capture, VIX Convergence, and opportunistic trading. The complaint alleges that Smith misrepresented the performance of Broad Reach Capital to clients and prospective investors. 

Smith allegedly provided clients and prospective investors with fabricated historical performance statistics, such as claiming annual returns of 33% in 2017 as well as positive monthly returns in 2018. Nevertheless, court documents illustrate that the total cash and securities in Broad Reach Capital’s accounts decreased between December 2016 and June 2019. The complaint alleges that Smith generated at least $100 million in revenue from nearly 40 investors over the course of the scheme. Rather than investing client money in the pooled funds, Smith utilized million of dollars to fund other business and personal expenses including $10 million for mineral mining operations and $2 million to cover an American Express credit card bill. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, million dollar scheme, fraud

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