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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23851 / June 2, 2017

Securities and Exchange Commission v. Marc D. Broidy and Broidy Wealth Advisors, LLC, No. 1:16-cv-5960 (E.D.N.Y filed October 27, 2016)

Settlement Concluded With Investment Adviser Who Defrauded Advisory Clients in Three Separate Schemes

On May 30, 2017, the Honorable Eric N. Vitaliano of the United States District Court for the Eastern District of New York entered a final consent judgment against defendants Marc D. Broidy and Broidy Wealth Advisors, LLC ("BWA"), enjoining them from violating antifraud provisions of the federal securities law and ordering them, jointly and severally, to pay $1,719,464 in disgorgement representing profits gained as a result of the conduct alleged in the complaint. The disgorgement was partially satisfied by Broidy's payment of $25,000 directly to a former client, and the balance deemed satisfied by the entry of an order of restitution in the parallel criminal matter, United States v. Marc Broidy, 17-cr-64 (ENV). Additionally, on June 1, 2017, the SEC issued an administrative order barring Broidy from the securities industry. Broidy consented to the issuance of a final judgment and administrative order.

The SEC charged Broidy and BWA with fraudulently overbilling clients and stealing assets from their trusts to pay such personal expenses as his home mortgage, overseas trips, and leases on two Mercedes-Benz vehicles. The SEC alleged that Broidy billed clients approximately $643,000 in excess fees and covered it up by altering the amount of management fees recorded on forms issued by brokerage firms before sending the forms to his clients. The SEC further alleged that Broidy fraudulently obtained additional funds to pay his personal expenses by misappropriating approximately $865,000 in assets from clients' trusts for which he was trustee, and that Broidy also defrauded advisory clients about some investments they made in privately-held companies when he did not inform them he was affiliated with those companies. The SEC's complaint, filed on October 27, 2016 charged Broidy and BWA with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 as well as Sections 206(1) and (2) of the Investment Advisers Act of 1940.

The SEC's investigation was conducted by Lindsay S. Moilanen, Andrew Dean, Kerri Palen, and Sandeep Satwalekar, and the case was supervised by Lara Shalov Mehraban of the New York office. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation.

 

https://www.sec.gov/litigation/litreleases/2017/lr23851.htm


Modified: 06/02/2017