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SEC Obtains Final Judgement Against Former RIA Exec Who Pled Guilty to Stealing from Firm

The Securities and Exchange Commission has obtained a final judgement against Richard Diver, the former chief operating officer and co-founder of wealth management firm M&R Capital Management.

The Securities and Exchange Commission has obtained a final judgement against Richard Diver, the former chief operating officer and co-founder of wealth management firm M&R Capital Management Inc., who was sentenced to three years in prison in a parallel criminal case to investment adviser fraud after stealing approximately $6 million from the company.

Diver previously pled guilty to investment adviser fraud in connection with overbilling the company’s clients by hundreds of thousands of dollars and rerouting those funds into his personal account, and wire fraud for diverting millions of dollars in the company’s payroll to his personal account over a period of several years.

M&R Capital Management is a registered investment adviser based in New York City that oversees approximately $500 million in client assets. Diver co-founded M&R Capital in 1993, and prior to his termination in December 2018, owned nine percent of the firm.

According to the SEC’s original complaint, between 2011 and December 2018, Diver engaged in an illicit scheme to steal approximately $6 million from his employer.

Diver, whose duties included managing the advisory firm’s payroll and client billing functions, allegedly inflated his salary by hundreds of thousands of dollars per year.

He was supposed to receive a base salary of $100,000, along with quarterly bonuses that increased his total annual compensation to between $300,000 to $350,000.

Beginning in 2011 and continuing into December 2018, he purportedly caused the company’s third-party payroll vendor to pay him a salary significantly beyond his authorized salary and bonus. Over that period, he had more than $4.5 million routed to his personal checking account above his approved compensation.

Beginning in 2017, the SEC claims that he began overbilling clients to increase revenues at the firm and continue financing his inflated compensation. In total, he purportedly stole $750,000 from more than 300 investment advisory accounts.

In early December 2018, M&R Capital’s chief executive officer confronted him about the scheme after one of the clients contacted him about the overbilling. Diver allegedly confessed and was terminated by the firm.

The SEC’s final judgment against Diver permanently enjoined him from future violations. He was ordered to pay disgorgement of $734,600, representing profits gained from the alleged conduct, plus interest of $70,600, for a total of $805,200, which was deemed satisfied by the criminal restitution and forfeiture order in the federal case.

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