The Securities and Exchange Commission today charged New York-area twin brothers, Adam Kaplan and Daniel Kaplan, for engaging in several different fraudulent activities to misappropriate more than $5 million from at least 60 of their 277 investment advisory clients.
According to the SEC’s complaint, the 35-year-olds were associated as investment adviser representatives with an SEC-registered investment adviser from May 2018 until their termination in July 2021, and after leaving that firm, they continued to act as investment advisers to certain clients.
The complaint alleges that, among other things, from at least May 2018 through July 2021, the twins overcharged clients for advisory fees by fraudulently inflating the fee amounts in clients’ advisory agreements, without the clients’ knowledge or consent, so that they could collect higher fees than their clients had agreed to pay. Many of the defendants’ clients were their family, friends and neighbors. Because of their relationships, some of the clients who were unsophisticated in financial matters placed significant trust in the brothers.
The complaint also alleges that, from at least May 2018 through at least October 2022, the twins misappropriated clients’ funds by fraudulently applying charges to their clients’ credit card and bank accounts for purported investments or additional advisory fees to which they were not entitled. The defendants allegedly used the clients’ funds obtained from these fraudulent activities for their personal benefit and to repay certain clients who complained about unusual account activity. The complaint also alleges that the brothers falsified documents and made Ponzi-like payments to clients to conceal their deceit.
According to BrokerCheck, the twins previously worked for Merrill Lynch and Morgan Stanley for less than a year, prior to beginning their fraudulent activities.
The SEC’s complaint charges Adam and Daniel with violating the antifraud provisions and seeks injunctions, disgorgement plus prejudgment interest and civil penalties.
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