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Securities America Advisors to Pay $1.8 Million For Failing to Prevent $8 Million Theft

The Securities and Exchange Commission has ordered Securities America Advisors, the RIA arm of broker-dealer Securities America Inc., to pay a $1.75 million civil penalty for failing to detect and prevent the theft of approximately $8 million.

The Securities and Exchange Commission has ordered Securities America Advisors, the RIA arm of broker-dealer Securities America Inc., to pay a $1.75 million civil penalty for failing to detect and prevent the theft of approximately $8 million by adviser Hector May, despite “multiple alerts” and “red flags.”

According to the SEC, Securities America failed to implement reasonably designed policies and procedures for reviewing client disbursement requests for possible theft before the disbursements occurred.

Between November 2014 and March 2018, May stole approximately $8 million from the accounts of at least 15 advisory clients. In 2019, he was sentenced to 13 years in prison after pleading guilty to conspiracy to commit wire fraud and investment adviser fraud.

The Securities and Exchange Commission charged May in December 2018 for running a multi-million-dollar Ponzi scheme with his daughter, Vania May Bell, who served as the controller of his investment advisory firm.

May worked in the financial services industry for approximately 35 years, including as an investment adviser representative at Securities America from 1994 until March 2018, when he was fired for misappropriation of client assets.

The SEC claims that three units at Securities America, which were primarily responsible for surveillance and identifying potential client theft, had “compliance failures.”

One unit utilized an automated trade monitor surveillance system that generated anti-money laundering alerts for potentially suspicious disbursements from client accounts. The SEC indicated that the system issued at least 55 alerts that identified suspicious disbursements, yet none were analyzed in accordance with Securities America policies. The SEC alleged that another unit dispersed six outgoing wires totaling $300,000 for a client who had an outdated wire request form on file.

Without admitting or denying the SEC’s findings, Securities America Advisors agreed to hire an independent consultant to review its supervisory and compliance procedures relating to client theft. The firm has one year to adopt and implement the recommendations contained in the consultant’s report.

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