SEC Charges Buffalo, N.Y. Advisory Firm and Principal with Fraud Relating to Association with Barred Adviser
Litigation Release No. 24253 / August 30, 2018
Securities and Exchange Commission v. Grenda Group, LLC, et al., No. 18-civ-954 (WDNY filed August 30, 2018)
The Securities and Exchange Commission has charged a Buffalo, N.Y., investment advisory firm and its owner for misleading firm clients about its association with a barred investment adviser, who is also being charged for violating the bar.
The SEC's complaint alleges that, in 2014, Walter Grenda sold his investment advisory assets, including his longstanding client base, to Grenda Group, LLC and his son, Gregory Grenda, in anticipation of a negative outcome in an SEC fraud investigation. In 2015, the SEC barred Walter Grenda from association with an investment adviser, but the SEC alleges that Walter Grenda continued to associate with Grenda Group by meeting with a prospective client and current clients in the firm's offices, as well as making discretionary changes to clients' investment accounts. The complaint alleges that Grenda Group and Gregory Grenda permitted Walter Grenda's association with the firm, failed to disclose his bar to their clients, and made misleading statements to clients who inquired about Walter Grenda's bar. The SEC further alleges that Walter Grenda impersonated a Grenda Group client on a call to the firm's broker-dealer and, while subject to the associational bar, Walter Grenda repeatedly impersonated his son on calls to the firm's broker-dealer, after which the broker-dealer terminated its relationship with Grenda Group. The complaint alleges that Grenda Group and Gregory Grenda later made misleading statements to clients and failed to disclose material facts about the termination.
The SEC's complaint charges Walter Grenda with violations of the Commission's July 2015 Order, and Walter Grenda, Group Group, and Gregory Grenda with violations of Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act"). The complaint also charges Grenda Group and Gregory Grenda with violations of Advisers Act Sections 206(1) and 206(2) or, in the alternative, Gregory Grenda with aiding and abetting Grenda Group's violations, and Walter Grenda with aiding and abetting Grenda Group's and Gregory Grenda's violations of Advisers Act Sections 206(1) and 206(2), and seeks penalties and permanent injunctions.
The SEC's Office of Investor Education and Advocacy (OIEA) issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. Investors can also use the SALI feature to find information about certain people who have had judgments or orders issued against them in SEC court actions or administrative proceedings.
The SEC's investigation was conducted by Kimberly A. Yuhas, a member of the Enforcement Division's Retail Strategy Task Force, along with Haimavathi V. Marlier, Melissa A. Coppola, and Steven G. Rawlings in the New York office, and the litigation will be led by Ms. Marlier and Ms. Yuhas. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.