SEC Files Order Against New Mexico Investment Adviser Over Allegedly Secret Commissions

The SEC has submitted an order against Dennis J. Malouf accusing him of investment adviser fraud. The regulator says that he allegedly took trading commissions that he wasn’t entitled to for himself. He was in charge of UASNM’s bond trading operation between 2008 and May 2011. Malouf, who was the CEO of UASNM Inc. is now with M Wealth Management.

According to the Commission, he set up a secret verbal deal with someone at a broker-dealer branch to send him the commissions generated by the broker for bond trades that this person did with Malouf’s firm. The regulator claims that rather than look for the best way to make the bond trades happen, UASNM worked only with the broker-dealer. Over the approximately three-year period, the investment advisory firm made over 200 bond trades through the unnamed branch. This was about $30 million to $40 million in trades every year, for which Malouf obtained about $1.1M in commissions.

In 2011, UASNM fired Malouf, who was a majority owner,because of misconduct allegations. He then sued for wrongful termination and that is when the firm’s attorneys discovered the purported commission deal.

Meantime, the regulator has censured UASNM, which settled for $100,000. It is also paying over $500,000 to over clients who were affected by the additional markups because the investment advisory firm did not look for the best bond prices.

Please contact our investment advisor fraud lawyers today. We help investors get their money back.

SEC files cease-and-desist order against adviser accused of stealing $1.1 million, InvestmentNews, June 10, 2014
UASNM Inc. settles with SEC over alleged commission scheme, BizJournals, June 10, 2014

Read the SEC Order (PDF)

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