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SEC Charges Investment Adviser with Defrauding Massachusetts Retirees

The Securities and Exchange Commission filed a complaint in federal court in Boston charging investment adviser and broker representative Richard G. Cody, a former resident of Massachusetts and current resident of New Jersey, with defrauding his retired clients. The SEC has asked the court to consider whether to impose certain preliminary relief against Cody and his company, Boston Investment Partners, including an asset freeze.

Cody has been registered at IFS Securities (2016), Concorde Investment Services (2014-2016), Westminster Financial Securities (2010-2013), Gunnallen Financial (2005-2010), and Leerink Swann & Company (2001-2005).

The SEC’s complaint alleges that Cody defrauded at least three of his retired clients over a 12-year period by concealing the fact that their retirement accounts had suffered extensive losses. According to the SEC’s complaint, the clients did not know that their accounts had lost substantial value and were being rapidly depleted.

Cody allegedly concealed these losses by leading the clients to believe that their investments were maintaining steady value and that the clients were living off income from their investments. By 2014, two of the retirees’ accounts had essentially run out of funds.

As recently as March 2016, Cody allegedly lied to a third client by telling a husband and wife that they had nearly $1.3 million remaining in their investment accounts when, in fact, their retirement accounts held only approximately $162,560.

To prevent his clients from detecting his longstanding fraud, Cody made wire transfers of monthly deposits to his defrauded clients’ bank accounts from sources other than their own retirement accounts so that they would not know their retirement funds had run out.

He also responded to requests from a client for a withdrawal of retirement funds by falsely representing that the client’s funds had been invested in an annuity and then sent the client a fraudulent document to create the appearance that a well-known financial firm held an annuity for that client. Cody also fabricated tax forms which purported to show retirement account distributions and tax withholding to disguise the fact that the clients’ accounts were essentially empty.

The SEC alleges that these deceptive acts caused Cody’s clients to believe that their retirement savings were secure when, in fact, they were not.

The complaint alleges that Cody violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

The SEC is seeking disgorgement of ill-gotten gains plus interest and penalties as well as permanent injunctive relief. The SEC also seeks a court-ordered asset freeze against Cody and Boston Investment Partners, which was named as a relief defendant, a temporary restraining order, and a detailed accounting of Cody’s assets.

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