The U.S. Securities and Exchange Commission is barring Nicholas Rowe, the former owner of registered investment advisor Focus Capital Wealth Management, from the industry. The charges come in the wake of parallel proceedings in New Hampshire where state regulators barred him from being licensed as an investment adviser. The New Hampshire Bureau of Securities Regulation also said he had to pay $20K.
Rowe and his RIA are accused of using inverse and leveraged exchange-traded funds in a way that was not suitable for clients. They also purportedly made misrepresentations regarding the fees that the clients would be charged.
Focus Capital had been registered with the SEC until 2012 when it registered with New Hampshire instead. The state launched a probe into the RIA’s investment practices, which allegedly included placing the assets of older investors into unsuitable strategies without notifying them that was what was happening. A number of elderly clients, including three widows, allegedly lost close to $1.M.
New Hampshire took Focus’s registration away in 2013 and told the firm and Rowe to pay the fine plus over $2.4M in investor restitution. Investors also filed FINA arbitration claims against Focus and Rowe. In one case, the RIA was ordered to pay $1.8M in restitution.
A hearing had been scheduled to go over the SEC Enforcement Division’s allegations. However, prior to that, Rowe submitted a settlement offer in which he agreed to the entry of an order that found it appropriate and in the interest of the public to impose the sanctions. By settling, Rowe is not denying or admitting to the charges.
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SEC Bars RIA Over Use of Leveraged, Inverse ETFs, Financial Adviser Magazine, February 26, 2016
New Hampshire Investment Adviser Focus Capital Wealth Management Accused of Elder Financial Fraud to Pay Exchange Traded Fund Victims $2.4M, Stockbroker Fraud Blog, March 14, 2013