SEC Charges Investment Adviser With Fraud

Posted on October 13th, 2015 at 3:21 PM
SEC Charges Investment Adviser With Fraud

From the Desk of Jim Eccleston at Eccleston Law LLC:

The SEC announced fraud charges against Family Endowment Partners LP (“FEP”) and its owner, Lee Dana Weiss, for allegedly self-dealing and failing to disclose facts to clients. FEP purportedly urged clients to invest more than $40 million in illiquid securities, without disclosing that Weiss had several investments in those companies. Subsequently, the SEC also accused FEP of failing to notify customers that FEP would benefit from the investments in Weiss’ entities. Weiss even advised clients to invest in a customer loan portfolio in which he purportedly would reap half the profits.

Specifically, the SEC’s complaint alleges that Weiss and FEP advised 11 FEP clients to invest about $40 million in a French company claiming to have designed methods to reduce the effects of tobacco smoking. Weiss failed to report several conflicts of interest regarding this deal, including the fact that he received more than $600,000 payments from the French company. Weiss even had a FEP client invest $2.5 million in one of the company’s subsidiaries without disclosing that the funds would be used to pay FEP’s delinquent interest to other FEP clients. Weiss and FEP, between 2012 and 2014, convinced clients to invest more than $8.25 million in company shares owned by Weiss. Weiss and FEP failed at least once to disclose that fact to customers.

SEC claims that FEP and Weis violated the antifraud provisions of the federal securities and related SEC antifraud rules. Antonia Chion, Associate Director in SEC’s Division of Enforcement, states that, “Investment advisers have an obligation to act in their clients’ best interests; however, as alleged in the complaint, FEP and Weiss repeatedly abused their clients’ trust and placed their own interests ahead of their clients’ interests.”

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

Tags: Eccleston Law LLC, James Eccleston, eccleston, Eccleston Law, SEC, Family Endowment Partners LP,

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