Securities Fraud: Former California Financial Adviser Who Worked For Texas Brokerage Firm is Barred After Bilking Professional Athletes of $2M, FINRA Fines Allstate Financial Services $1M for Inadequate Supervision, and Former Registered Investment Adviser Settles Cherry Picking Scam for $328K

Ex-Financial Adviser Who Worked for Texas-Based Firm is Barred by SEC After Defrauding Pro Athletes 
Ash Narayan, an ex-California financial adviser, has been barred by the US Securities and Exchange Commission. Narayan, who is accused of secretly receiving almost $2M from companies that he invested in on behalf of his professional athlete clients, agreed to no longer associate with advisory or brokerage firms to resolve the regulator’s allegations.

Narayan worked for Dallas firm RGT Wealth Advisors, but he was based in California as the managing director of its Irvine office. He also is accused of misrepresenting himself as a CPA and placing clients in unsuitable private investments. In October, the Certified Financial Planner Board of Standards issued a temporary suspension against him while an investigation was conducted into the allegations. RGT Wealth Advisers fired Narayan early this year.

According to the SEC, Narayan’s alleged fraud occurred between 2010 and 2016, during which time he directed $33M to a company that he was involved in and was in poor financial health. By settling, Narayan is not denying or admitting to the SEC charges.

Finra Fines Allstate’s Brokerage Firm $1M 
The Financial Industry Regulatory Authority is ordering Allstate Financial Services to pay a $1M fine for its purported failure to supervise adviser and client information. The regulator says that because of five systemic problems, the broker-dealer of Allstate Insurance Co. did not properly supervise certain transactions and communications, failed to give clients all of the information they needed, and did not retain certain records. Some of the issues reportedly had been going on for 15 years.

These systemic problems purportedly included a failure to review 44 million emails and improperly paying 4400 brokers who were not at the brokerage firm anymore $587K in trailing commissions. Also, FINRA says that the firm failed to adequately supervise a number of the programs that its registered persons used to set up consolidated reports.

The self-regulatory organization said that Allstate Financial failed to retain complete records for about 9,000 clients and these records were not connected to software that was used to send out certain notices. The broker-dealer also purportedly improperly labeled 2,900 client accounts as closed, did not confirm the identity of some of the owners of certain open accounts (or whether the recommendations made to these clients were suitable), and failed to send out the mandated account records and notices that outline its customer privacy policy.

 

TPG Advisors Settle SEC Charges Alleging Cherry Picking Scam 
The US Securities and Exchange Commission is ordering TBG Advisors and its principal Larry M. Phillips to pay $328K to settle allegations that the ex-registered investment adviser was involved in a cherry picking scam that preferenced certain investors at the expense of other investors. Phillips is now barred from associating with any RIA or brokerage firm.

TPG Advisors lost its SEC registration in August. The Commission claims that Phillips made unfair allocations, sending a “disproportionate” quantity of profitable options and equity trades to certain clients that he favored, including a relative, a longtime friend, and two longtime clients.

When assessing the performance in six of the accounts that Phillips and TBG Advisors had favored the most, the regulator said that these exhibited a “statistical anomaly” in which the chances of their profitability stemming from “random chance” was under 1%. The SEC said that the performance results in the eleven accounts that were harmed also were anomalies.

If you suspect that your investor losses are due to securities fraud, please contact Shepherd Smith Edward and Kantas, LTD LLP so that we can help you explore your legal options.

Read the SEC Complaint in the Narayan Case (PDF)
Finra Slaps Allstate Financial with $1M Fine for Array of Fumbles, InvestmentNews, December 16, 2016
Read the SEC Filing in the TPG Advisors Case (PDF)