SEC Revokes Registration of Connecticut-Based Investment Advisory Firm
The Securities and Exchange Commission has revoked the registration of Connecticut-based investment advisory firm Temenos Advisory Inc.
The Securities and Exchange Commission has revoked the registration of Connecticut-based investment advisory firm Temenos Advisory Inc.
Earlier this month, the SEC obtained a $2 million judgement against Temenos and its former chief executive officer George Taylor for purportedly placing $19 million of investor money, including elderly investors’ retirement savings and pension plans, into four unsuitable illiquid private placement offerings.
The SEC alleged that while Temenos and Taylor charged advisory fees for unbiased financial advice, they concealed the commissions they were receiving, including cash and ownership stakes in the private companies they recommended. The SEC also claims that Temenos and Taylor “grossly overbilled” some of their advisory clients.
“Temenos and Taylor repeatedly downplayed or concealed risks, and overstated potential gains, associated with a series of illiquid private placements that they advised their clients and prospective clients to invest in,” the SEC said. “In so doing, Taylor and Temenos promoted the investments and pocketed commissions—a percentage of each client’s investment—from the private placement companies, thereby illegally acting as unregistered broker-dealers.”
Prior to 2014, the SEC indicated that Temenos and Taylor had invested their advisory clients’ money primarily in mutual funds, exchange traded funds, variable annuities, and publicly traded stocks. They charged an asset management fee to their clients based on the clients’ total assets under their management.
However, starting in 2014, the SEC claims that Temenos and Taylor began actively recommending the private securities to clients and prospective clients without proper due diligence.
“Taylor and other Temenos employees explicitly tied the aggressive solicitation of clients for private placement investments (of which Temenos would receive a fee based on a percentage of the amount invested) to defendants’ dire financial situation,” the SEC stated in its original complaint.
According to the SEC’s original complaint, Taylor did not disclose to clients that both he and Temenos were under financial stress and were struggling to meet operating expenses. The SEC claims that he had frequent overdue or unmet payrolls, unpaid commissions to Temenos employees, numerous unpaid bills including unpaid employee health insurance bills, low or overdrawn bank account balances, and the possibility of power, telephone, and internet service being shut off for non-payment.
Temenos is based in Litchfield, Connecticut with additional offices in St. Simons Island, Georgia, and Scottsdale, Arizona.
