SEC Charges Financial Advisor for Defrauding NBA Players

The Securities and Exchange Commission charged Darryl Matthew Cohen, a former investment adviser at Morgan Stanley, with misappropriating more than $1 million from three current and former NBA players over a period of two and a half years.

According to the SEC’s complaint, from October 2017 through April 2020, Cohen used client funds, without their understanding or authorization, for personal expenditures including to support his son’s amateur basketball program, for a home gym, and to pay back another client whose funds were misappropriated by Cohen. He also allegedly sold life insurance settlements to the clients for kickbacks to fund his home improvements.

According to BrokerCheck, Cohen worked for Morgan Stanley from 2015 to 2021, at the time of the alleged illegal activities. Prior to this, Cohen was with Wells Fargo for 12 years and Merrill Lynch, Pierce, Fenner & Smith Inc. for six years.

The complaint seeks permanent injunctive relief, disgorgement and prejudgment interest, and a civil penalty. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Cohen.

According to the Department of Justice, Cohen is part of a six-count Indictment along with Brian Gilder, Charles Briscoe, and Calvin Darden Jr. in connection with two schemes to defraud professional basketball players.

The DOJ charged the financial advisor, financial planner, National Basketball Association agent, and previously convicted fraudster with one count of conspiracy to commit wire fraud and one count of wire fraud. Each count carries a maximum sentence of 20 years in prison. Cohen is also charged with one count of investment advisor fraud, which carries a maximum sentence of five years in prison.

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