SEC Charges Two Tampa-Area Investment Advisers of Fraud | Investor

Posted on November 27th, 2013 at 2:17 PM

From the Desk of Jim Eccleston at Eccleston Law Offices:

On November 20, 2013, the Securities and Exchange Commission (“SEC”) announced charges against two Tampa-area investment advisers accused of committing fraud by failing to truthfully inform clients about compensation received from offshore funds they were recommending as safe investments despite substantial risks and red flags. In addition, the advisers were also charged with contributing to violations of the “custody rule” that requires investment advisory firms to establish specific procedures to safeguard and account for client assets.

            The SEC alleged that Gregory Adams and Larry Grossman solicited and directed clients of their investment firm, Sovereign International Asset Management, to invest almost exclusively in funds controlled by an asset manager, Nikolai Battoo. The SEC charged Battoo separately last year. Specifically, the SEC alleged that Grossman and Adams failed to inform their clients about the conflict of interest in recommending these investments as Battoo was paying them millions of dollars in compensation for steering investors to his funds.

            According to the SEC, Grossman was paid approximately $3.3 million and Adams received $1 million in the undisclosed compensation agreements. Moreover, Grossman and Adams insisted that the investments were safe, diversified, independently administered and audited, and suitable for their clients’ investment objectives and risk profiles.  Most of these clients were retirees. In all actuality, Battoo’s funds that were being sold by Grossman and Adams were risky, lacked diversification, and lacked independent administrators and auditors. Lastly, Grossman and Adams failed to investigate numerous red flags surrounding Battoo and these funds.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

Tags:

Return to Archive

TESTIMONIALS

Previous
Next

Jim, Stephany and the whole team were a God send.  We felt like we were put into a situation where we had no advocate. Jim’s team came in with a strong, well laid out strategy on how to get our story heard. Where our outside compliance company had no ability to help, our Broker Dealer was impenitent, and the regulators were aggressive pursuing vague rules, Jim came like a barricade against an assault we did not understand. Though you pay member dues to be affiliated with FINRA and a B/D, you have no voice. The only thing that is truly heard in this un-level playing field is a bulldog’s bark like Jim’s. I would encourage anyone to call Jim and his team to find a real ally in the tough and complicated world of securities regulation. They are truly the best.

Greg P.

LATEST NEWS AND ARTICLES

November 11, 2024
Charles Schwab Faces Multiple Lawsuits Alleging Elder Fraud Neglect

Charles Schwab and its affiliates are under scrutiny after recent lawsuits allege the firm failed to prevent scammers from defrauding elderly clients.

November 8, 2024
Former Advisor Faces Lawsuit Over Alleged Mishandling of Premium-Financed Life Insurance Plan

Joshua L. Gottlieb, barred by FINRA in 2017, faces a lawsuit alleging significant financial harm to a client following the sale of a premium-financed indexed universal life (IUL) insurance program. 

November 7, 2024
Fidelity Data Breach Exposes Sensitive Information of Over 77,000 Customers

According to InvestmentNews, Fidelity Investments recently disclosed a data breach affecting tens of thousands of customers, exposing sensitive personal data such as Social Security numbers and driver’s license information.