U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23710 / December 22, 2016
Securities and Exchange Commission v. Richard G. Cody, et al., Civil Action No. 16-cv-12510-FDS (D. Mass., filed Dec. 12, 2016)
SEC Obtains Preliminary Injunction and Asset Freeze Against Investment Adviser for Defrauding Massachusetts Retirees
The Securities and Exchange Commission announced today that it has obtained a preliminary injunction and an asset freeze against investment adviser and broker representative Richard G. Cody, a former resident of Massachusetts and current resident of New Jersey.
The preliminary injunction restrains Cody and his company, Boston Investment Partners, LLC (BIP), from violating certain antifraud provisions of the federal securities laws, orders that the defendants' assets be frozen until further notice, enjoins them from exercising any authority or control over client accounts, and orders a detailed accounting of Cody's and BIP's assets.
The SEC's complaint, filed on December 12, 2016 in federal court in Massachusetts, alleges that Cody defrauded at least three of his retired clients over a twelve-year period by concealing the fact that their retirement accounts had suffered extensive losses. The SEC alleges that the clients did not know that their accounts had lost substantial value and were being rapidly depleted. Cody allegedly concealed these losses by leading the clients to believe that their investments were maintaining steady value and that the clients were living off income from their investments. By 2014, two of the retirees' accounts allegedly had essentially run out of funds. Cody allegedly continued to hide that the retirees' money was gone by making wire transfers of monthly deposits to the retirees' bank accounts from other sources and sending the clients fabricated tax forms. The SEC alleges that these deceptive acts caused Cody's clients to believe that their retirement savings were secure when, in fact, they were not.
The SEC's complaint alleges that Cody violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and seeks disgorgement of ill-gotten gains plus interest and penalties as well as permanent injunctive relief.
The SEC's investigation was conducted by Alicia M. Reed, John McCann, Amy Gwiazda, Richard Harper and Louis Randazzo of the SEC's Boston Regional Office. The litigation will be led by Mr. Harper. The SEC's investigation is continuing.
The SEC acknowledges the assistance of FINRA in this matter.