Securities Cases: Hawaii-Based Investment Adviser is Accused of Cherry-Picking Trades, Broker Ordered to Pay $600K for Elder Financial Fraud, and FINRA Bars Ex-Axa Advisors Broker  

 SEC Charges Hawaii-Based Investment Adviser for Misleading Clients and Cherry Picking

The U.S. Securities and Exchange Commission has filed civil charges against Oracle Investment Research, which is based in Hawaii, and its owner Laurence I. Balter. The regulator claims that the investment adviser cherry picked trades that were profitable for his own accounts. He is also accused is  misleading clients, including senior citizens, about the risks involved in the investments he recommended, as well as about the fees they would be charged.

 

According to the SEC Enforcement Division, Balter and Oracle Investment Research bought options and equities in an omnibus account but waited to distribute the trades until their execution. Then, he would allegedly move the profitable trades into his accounts and the unprofitable ones to the accounts of clients. 

 

Balter is accused of falsely telling clients that invested in his affiliated mutual fund that they wouldn’t have to pay both fund management fees and advisory fees. He allegedly went on to charge them both fees. The SEC contends that Balter made over 500K in ill-gotten gains by cherry picking trades and taking out more in the management fees than he was owed. 

 

FINRA Orders Ex-First Heartland Capital Broker to Pay $600K for Allegedly Bilking Older Couple

 

The Financial Industry Regulatory Authority said that Jerome Scott Crause must pay $600K in damages to Keith and Joyce Reuter, as well as $18K for their legal fees, in their senior financial fraud case against him.  The couple is in their eighties. According to the regulator, the ex-First Heartland Capital Inc. broker took over $150K from the Reuters by abusing their vulnerability and his position of trust while making them believe that they were giving him loans. 

 

The Reuters claim that Krause “borrowed” the money from them between ’10 and ’14, and liquidated some of their investments to cover his “loans” without their permission. They said that he did this any plans to pay them back.

They are accusing First Heartland, a Missouri-based broker-dealer, of neglecting to properly supervise Krause. First Heartland, which fired Krause in 2012, denies the allegations against it.

 

SRO Bars Ex-Axa Advisor Broker After $3.1M Judgment Related to Ponzi Scam 

FINRA has barred ex-Axa Advisors broker Herbert Weinstein, who was the subject of a $3.1M judgment involving a Ponzi scam. The judgment was submitted against him and the certified public accounting firm where he was a partner. 

It was Weinstein’s former client Ira Pressman who was sentenced to prison for bilking 20 investors in a $6M Ponzi scam. After Pressman filed for bankruptcy, Weinstein and his firm were sued by trustees because they had worked with Pressman before and during the fraud.

 Weinstein denies involvement in the Ponzi scam. InvestmentNews reports that according to Weinstein’s lawyer, he didn’t know about the scam until Pressman told him about it in 2011.

FINRA said the bar wasn’t for the $3.1M judgment but because Weinstein wouldn’t appear to testify. Axa Advisors let Weinstein go from his job in June.