On August 31, 2021, the Securities and Exchange Commission obtained a final judgment against investment adviser Douglas E. Elstun of Lenexa, Kansas, who was charged with repeatedly defrauding and breaching his fiduciary duty to advisory clients of his investment advisory firm Crossroads Financial Management, Inc.

The SEC's complaint, which was filed in federal court in the Western District of Missouri on March 29, 2021, alleges that from 2015 through 2018, Elstun fraudulently overcharged his advisory clients by charging undisclosed fees, including higher advisory fees than clients had agreed to pay, and by applying the advisory fee to non-advisory assets. The complaint alleges that Elstun also traded in high risk, daily leveraged and/or inverse exchange-traded funds (ETFs) and misled advisory clients by failing to disclose the substantial risks of buying and holding these products, and by inaccurately representing that the products functioned as "insurance" or a "hedge" for their portfolios even though his trading of these products actually created significant risk for clients. The complaint further alleges that Elstun made unsuitable and risky investments that were inconsistent with his clients' investment objectives and risk tolerances. As alleged in the complaint, as a result of Elstun's ETF trading, Elstun's clients lost millions.

The SEC's complaint charged Elstun with violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act, or in the alternative, aiding and abetting Crossroads' violations of those provisions. The complaint also charged Elstun with aiding and abetting Crossroads' violations of the record-keeping, custody, cash solicitation, and compliance provisions of Sections 204(a) and 206(4) of the Advisers Act and Rules 204-2(a)(10), 206(4)-2, 206(4)-3, and 206(4)-7 thereunder. Without admitting or denying the SEC's allegations, Elstun consented to the entry of a final judgment that permanently enjoins him from violating the charged provisions, orders him to pay disgorgement of $386,647 together with prejudgment interest of $64,338, and orders him to pay a civil penalty of $390,094.

The SEC's litigation was led by Zachary T. Carlyle and supervised by Gregory A. Kasper. The SEC's investigation was conducted by Eric Day and Kimberly S. Greer and supervised by Kimberly L. Frederick and Jason J. Burt of the SEC's Denver Regional Office. The SEC examination that led to the investigation was conducted by Jason D. Morrison, Sabrina M. Silverstein, and Jeb Wildschut and supervised by Nicholas F. Madsen, Lisa Byington, and Thomas M. Piccone of the SEC's Denver Regional Office.