SEC Charges Buffalo Advisory Firm and Principal With Fraud Relating to Association With Barred Adviser

Reason:
Fraudulent
Content of Penalty:

The Securities and Exchange Commission today filed charges against a Buffalo, New York, investment advisory firm and its owner for misleading firm clients about its association with a barred investment adviser, who is also being charged for violating the bar.  

The SEC’s complaint alleges that in 2014, Walter Grenda sold his investment advisory assets, including his longstanding client base, to Grenda Group LLC and his son, Gregory Grenda, in anticipation of a negative outcome in an SEC fraud investigation. In 2015, the SEC barred Walter Grenda from association with an investment adviser, but the SEC alleges that Walter Grenda continued to associate with Grenda Group by meeting with a prospective client and current clients in the firm’s offices, as well as making discretionary changes to clients’ investment accounts. The complaint alleges that Grenda Group and Gregory Grenda permitted Walter Grenda’s association with the firm, failed to disclose his bar to their clients, and made misleading statements to clients who inquired about Walter Grenda’s bar. The SEC further alleges that Walter Grenda impersonated a Grenda Group client on a call to the firm’s broker-dealer and, while subject to the associational bar, Walter Grenda repeatedly impersonated his son on calls to the firm’s broker-dealer, after which the broker-dealer terminated its relationship with Grenda Group. The complaint alleges that Grenda Group and Gregory Grenda later made misleading statements to clients and failed to disclose material facts about the termination.

“Associational bars are designed to protect retail investors from those the SEC has deemed unfit to provide advisory services,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “Here, we allege that bar was circumvented, and took action to ensure investors are protected.”

The SEC’s Office of Investor Education and Advocacy (OIEA) recently issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. Investors can also use the SALI feature to find information about certain people who have had judgments or orders issued against them in SEC court actions or administrative proceedings. 

The SEC’s complaint charges Grenda Group, Gregory Grenda, and Walter Grenda with violating Section 203(f) of the Investment Advisers Act of 1940. It also charges Grenda Group and Gregory Grenda with fraud under the Advisers Act, and Walter Grenda for aiding and abetting their fraud. The complaint seeks penalties and permanent injunctions.

Date: 04/09/2018
Link: https://www.sec.gov/news/press-release/2018-172

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