SEC Charges Advisory Firm and Executives with Devising an Elaborate Scheme to Defraud Clients Out of More Than $75 Million
Litigation Release No. 25491 / August 30, 2022
Securities and Exchange Commission v. Lindberg, et al., No. 1:22-cv-00715 (M.D.N.C.) filed August 30, 2022
The Securities and Exchange Commission today charged two North Carolina-based executives, Gregory E. Lindberg and Christopher Herwig, and their Malta-based registered investment adviser, Standard Advisory Services Limited, for defrauding clients out of more than $75 million through undisclosed transactions that benefited themselves and their companies.
According to the SEC's complaint, from July 2017 through 2018, Lindberg and Herwig, through Standard Advisory, breached their fiduciary duties to their advisory clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in the best interest of their clients. The SEC's complaint further alleges that the defendants misappropriated more than $57 million in client funds and that Standard Advisory collected more than $21.4 million in advisory fees generated in connection with these schemes. In an attempt to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a web of affiliate companies and allegedly used the proceeds to pay themselves or to divert the funds to Lindberg's other businesses.
The SEC's complaint, which was filed in the U.S. District Court for the Middle District of North Carolina, charges Lindberg, Herwig, and Standard Advisory with violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, charges Lindberg and Herwig with aiding and abetting Standard Advisory's violations of Sections 206(1) and 206(2) of the Advisers Act of 1940, and seeks disgorgement plus prejudgment interest, penalties, and permanent injunctions.
The SEC's investigation was conducted by Kevin Wisniewski, Craig McShane, and Kristine Rodriguez and supervised by Ana D. Petrovic, of the Complex Financial Instruments Unit and the Chicago Regional Office. The litigation will be led by Alyssa Qualls and Kevin Wisniewski of the Trial Unit.