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SEC Charges Dually Registered Broker with Operating Ponzi Scheme

The Securities and Exchange Commission has filed an emergency action and charged Wilmington, North Carolina-based broker and investment adviser Shawn Good with defrauding clients and misappropriating millions of dollars of investor funds.

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The Securities and Exchange Commission has filed an emergency action and charged North Carolina-based broker and investment adviser Shawn Good with defrauding clients and misappropriating millions of dollars of investor funds.

Good was dually registered with Morgan Stanley as a broker and investment adviser for nine years before being barred by FINRA earlier this month for refusing to participate in their investigation. Morgan Stanley disclosed to FINRA that it terminated Good’s registration because “he declined to cooperate with an internal firm review following client accusations.”

According to the SEC’s complaint, Good raised at least $4.8 million from five of his Morgan Stanley clients, which resulted in at least $2 million of investor losses.

Beginning in December 2012 and continuing through at least February 2022, Good reportedly solicited clients to transfer funds to his personal bank account to make low-risk investments in real estate development projects and supposedly tax-free government bonds.

Rather than invest the money, the SEC alleges that Good used the funds to repay other victims and to pay for his own personal expenses, including luxury cars, international travel, and approximately $800,000 in credit card bills.

According to the complaint, Good’s Venmo transfers included memo lines such as “because youre sexy [sic],” “tattoo,” “Hotel for Destiny,” “Nailz,” and “shopping.”

The SEC claims that one victim, a single mother and choir singer with limited income, relied on her assets at Morgan Stanley from a divorce settlement to pay living expenses for herself and her children. She reportedly lost $1.3 million in Good’s Ponzi scheme, representing most of her livelihood.

Prior to Morgan Stanley, he spent eight years at Wells Fargo and 14 years at Charles Schwab.

The SEC’s complaint charges Good with violating the antifraud provisions of various federal securities laws and seeks preliminary and permanent injunctive relief, an asset freeze, an accounting, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.

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