The Securities and Exchange Commission has issued an alert cautioning investors to double check the credentials of financial professionals before working with them. This week, the regulator’s Enforcement Division announced two securities fraud cases against investment advisers accused of making false claims about their background and experience.
In one case, Michael G. Thomas purportedly told investors that Fortune Magazine had named him one of the “Top 25 Rising Business Stars.” The distinction does not exist. He also allegedly inflated his past investment performance, pumped up a fund’s projected performance, and made misrepresentations about who would be advising and co-managing a fund.
Thomas has consented to pay a $25,000 penalty. He agreed to not take part in the offer, issuance, or sale of certain securities for five years. Thomas is barred from associating with investment advisers, dealers, and brokers during that time.
In the other SEC case, the regulator said that Todd M. Schoenberger, who was a frequent contributor and guest on national TV business shows, misrepresented his educational credentials. For the Delaware radio show he was recently hired to host, he was touted as a retired hedge fund manager and “accomplished veteran” of Wall Street.
The SEC said that Schoenberger falsely told prospective investors that his unregistered investment advisory firm LandCold Capital LP would pay back promissory notes they were solicited for purchase with fees made through the management of a private fund. The fund was never launched. The SEC also contends that Schoenberger never paid investors the returns he guaranteed them.
He is resolving the SEC charge by consenting to pay $65K in disgorgement of ill-gotten gains in addition to interest. He also agreed to an order that prevents him from serving as a director or officer of a public company. He cannot associate with any dealer, broker, or investment adviser.
In its Investor Alert, the SEC’s Office of Investor Education and Advocacy said that fraudsters have been known to misrepresent their education, lie about awards, claim to hold certain professional titles, create fake online profiles, and even appear as a guest on financial TV programs. The agency said that investors shouldn’t invest solely because of assertions someone has made about their experience and credentials.
At Shepherd Smith Edwards and Kantas, LTD LLP, our investment adviser fraud lawyers are here to help investors get their losses back. Contact us today.
Investor Alert: Beware of False or Exaggerated Credentials, Investor.org, June 3, 2015