Earlier this week, the Securities and Exchange Commission (SEC) filed a complaint against a former UBS financial adviser in an allegedly fraudulent scheme that began in 2006. The defendant has agreed to settle the matter without admitting or denying the charges.
According to the SEC's complaint, between 2006 and 2009, the broker who held Series 7, 63 and 65 licenses and worked for UBS Financial Services LLC in the Walnut Creek, California office, established a private pooled investment fund to be comprised of life settlement policies.
After advising his clients that this was a sound investment, he raised $1.4 million for the investments from his UBS clients. However, rather than investing it as agreed, he used the funds for his own personal use, spending it on a lavish lifestyle. He allegedly did so by "liquidating his customers' securities and funneling the money back to the fund and its investors."
As an attempt to avoid the theft being discovered, the broker is said to have convinced some of his other UBS customers to liquidate their securities in the amount of $1.9 million. In some instances, the broker asked customers to provide their liquidated securities to him as loans on which they would make a quick return. He then allegedly took the proceeds of those sales and loans to replenish the original fund.
Criminal charges have been filed against the former UBS adviser for conduct involved in the scheme alleged by the SEC.
The adviser has been permanently enjoined from further violations of Sections 10(b) and 15(a) of the Securities Exchange Act and Rule 10b-5. He is also forever barred from the securities industry.
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