SEC Charges Advisory Firm with $19 Million in Improper Private Placement Sales
The Securities and Exchange Commission has charged a Connecticut-based investment advisory firm and its chief executive officer for allegedly putting $19 million of investor money, including elderly investors’ retirement savings and pension plans, in unsuitable illiquid private placement offerings.
The Securities and Exchange Commission has charged a Connecticut-based investment advisory firm and its chief executive officer for allegedly putting $19 million of investor money, including elderly investors’ retirement savings and pension plans, in unsuitable illiquid private placement offerings.
The SEC’s complaint alleges that Temenos Advisory Inc. and George L. Taylor steered advisory clients and other investors, including senior citizens and individuals approaching retirement, into four illiquid private offerings. The SEC claims that Temenos and Taylor repeatedly downplayed or concealed risks, and overstated potential gains, associated with the investments.
While Temenos and Taylor charged advisory fees for supposedly unbiased financial advice, they allegedly concealed from their clients the high commissions they were receiving, including cash and ownership stakes in the private companies they recommended. The SEC also alleges that Temenos and Taylor “grossly overbilled” some of their advisory clients.
“Investment advisers must put clients’ interests ahead of their own,” said Paul Levenson, director of the SEC’s Boston regional office. “Temenos violated that duty by placing clients in risky private placements while downplaying the risk of those investments and concealing the financial conflicts that motivated the recommendations.”
The SEC’s complaint, filed in federal court in Connecticut, charges the defendants with violating the anti-fraud and registration provisions of the federal securities laws. The SEC is seeking disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions.
