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SEC Charges Ex-Adviser With Defrauding Account Holders

SEC Charges Ex-Adviser With Defrauding Account Holders. Fraud, Securities and Exchange Commission, SEC, Rodriguez, Texas, disciplinary, misappropriation

The Securities and Exchange Commission charged Jesus Rodriguez with fraud for misappropriating nearly $3.5 million from at least 10 brokerage account holders and advisory clients.

The SEC alleges that from 2014 to 2021, while employed as a registered representative and investment adviser representative in the El Paso, Texas, office of Morgan Stanley, Rodriguez initiated more than 250 fraudulent and unauthorized disbursements from the accounts of at least 10 of his brokerage customers and advisory clients. Rodriguez, age 44, allegedly carried out the disbursements primarily through unauthorized ACH transfers, wire transfers, and cash journal transfers to other accounts at his former firm.

Rodriguez allegedly used the funds he misappropriated for personal expenses including to pay credit card bills, buy automobiles, and pay his family members. The SEC alleges that in many instances Rodriguez funded his misappropriations by incurring a debt for the account holder that was secured by the securities portfolios in their brokerage and/or advisory accounts. In other instances, Rodriguez allegedly misappropriated the proceeds of securities sales. The SEC further alleges that Rodriguez engaged in deceptive conduct to further conceal his misappropriation scheme, including by fabricating authorizations for the transfers and by lying to his employer when asked about certain transactions involving the affected accounts.

Rodriguez was terminated by Morgan Stanley in 2021, following the discovery of the conduct alleged in the complaint. Rodriguez was subsequently barred from the securities industry by FINRA later that year. He is presently facing criminal prosecution by authorities in El Paso.

The SEC’s complaint, filed in the U.S. District Court for the Western District of Texas, charges Rodriguez with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks permanent injunctive relief, the disgorgement of allegedly ill-gotten gains plus prejudgment interest, and a civil penalty.

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