Baton Rouge-Based Investment Adviser To Be Barred and Firm Registration To Be Revoked For Hiding Losses From Investors
Litigation Release No. 24050 / February 15, 2018
Securities and Exchange Commission v. Commonwealth Advisors, Inc. and Walter A. Morales, No. 3:12-CV-00700 (M.D. La. filed Nov. 8, 2012)
A hedge fund manager in Baton Rouge, La. has agreed to be barred from associating with any investment adviser and the firm he founded has consented to the revocation of its registration with the Securities and Exchange Commission for their participation in an alleged financial crisis-era scheme.
On February 15, 2018, the Honorable John W deGravelles of the U.S. District Court for the Middle District of Louisiana entered a final judgment against Walter A. Morales and Commonwealth Advisors Inc. The final judgment orders Morales to pay a $130,000 penalty and permanently enjoins:
- Commonwealth and Morales from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder;
- Commonwealth from violating Sections 204 and 207 of the Advisers Act and Rules 204-2, 206(4)-2 and 206(4)-7; and
- Morales from aiding and abetting violations of Sections 206(4) and 207 of Advisers Act and Rules 206(4)-2 and 206(4)-7 thereunder.
Morales and Commonwealth also agreed to the entry of an SEC order, based on the court's entry of the injunctions, that revokes Commonwealth's registration as an investment adviser and bars Morales from associating with an investment adviser with the right to apply for reentry after five years.
Morales and Commonwealth agreed to the settlement without admitting or denying the allegations in the SEC's complaint or the findings in the SEC order.
In November 2012, the Securities and Exchange Commission charged Morales and Commonwealth with allegedly defrauding investors by hiding losses from investments tied to residential mortgage-backed securities.
The court's entry of judgment ends this litigation in its entirety.