Legal Matters

The Securities and Exchange Commission has entered an Order permanently barring Atlas Capital Management adviser Craig Arsenault, of Laguna Niguel, California, for defrauding his clients. The SEC Complaint alleges that Atlas clients invested $5.7 million in ACT Global Investments, a company controlled by Arsenault. According to the allegations, Mr. Arsenault told the clients that their funds would be used to make loans to doctors to purchase medical equipment while generating substantial income. Instead, Arsenault and ACT used the money to make unsecured loans to other ventures, including a used car dealership, and to acquire real estate. Making matters worse, Mr. Arsenault also sent clients false account statements making it appear as though the investments were profitable when they were not, according to the SEC. The SEC also alleges that Mr. Arsenault misappropriated over $1 million of his clients’ money. If you or someone you know lost money as a client of Craig Arsenault or Atlas Capital Management due to unsuitable, [...]

The Securities and Exchange Commission has entered an Order permanently barring former Wells Fargo Advisors broker John Gregory Schmidt, of Dayton, Ohio, from the securities industry. The SEC’s Order includes findings that Mr. Schmidt, while a registered representative of Wells Fargo Advisors, misappropriated $1.3 million from the accounts of his clients, most of whom were elderly. The SEC Complaint alleges that between 2003 and October 2017, Schmidt stole from seven of his brokerage customers and transferred money to the accounts of at least ten other customers whose accounts were experiencing shortfalls. According to the SEC, Schmidt sent customer statements which “grossly overstated their account balances and falsely assured them that their investment returns could fund their withdrawals without jeopardizing their principal.” Making matters worse, the SEC found that several of Schmidt’s customers were suffering from Alzheimer’s disease or other forms of dementia. Schmidt received over $230,000 in commissions from customers who were associated with the misappropriated funds. If you or [...]

The Securities and Exchange Commission has entered an Order finding that Valley Forge Asset Management, as a division of BB&T Securities, made statements to clients which misled them into believing they were receiving full, in-house, brokerage services at a discount when in fact there were significantly less expensive options available. Valley Forge offered its advisory clients three choices for brokerage services. In the first, a client could direct his or her brokerage to Valley Forge’s own “full-service brokerage” and negotiate his or her commission rates. Valley Forge generally told clients under this option that it would provide a discount of at least 70% off of their full commission rates. According to the SEC, Valley Forge Asset Management used misleading statements and inadequate disclosures about its services and pricing to convince customers to choose the in-house broker, but did not provide those clients with any additional services than it did to clients who chose other brokerages with significantly lower commissions. Valley [...]

The Securities and Exchange Commission has entered an Order permanently barring Staten Island, New York-based broker William C. Gennity from the securities industry. The SEC’s Order includes findings that Mr. Gennity, while a registered representative of Alexander Capital, L.P., engaged in a pattern of high-cost in-and-out trading without any reasonable basis to believe that his recommendations were suitable for anyone (a.k.a. “churning”). The SEC also found that Gennity’s recommendations resulted in losses for the customers and ill-gotten gains for Gennity; the recommendations were incompatible for the customers’ financial needs, investment objectives, risk tolerance, and circumstances (i.e., “unsuitable); Gennity concealed material information and made material misrepresentations to his customers; churned customer accounts, and made unauthorized trades in customer accounts. The SEC sanctioned Gennity by barring him from association with any broker, dealer, investment adviser, or from acting in any other capacity in association with the securities industry. Gennity separately was ordered to pay total financial penalties of over $300,000 in the [...]