The SEC's Division of Enforcement continues its efforts to protect retail investors, gaining reparations for victimized investors in an action against yet another Ponzi scheme.
At the end of January, the Securities and Exchange Commission (SEC) announced that the U.S. District Court for the Southern District of Florida approved judgements against Woodbridge Group of Companies, LLC, and its former owner and CEO, Robert H. Shapiro for the operation of a Ponzi scheme targeting 8,400 retail investors, including elderly retirees.
The Action Against Woodbridge Group
An emergency action was filed against Woodbridge and other defendants by the SEC in December 2017 alleging the operation of a $1.2 billion Ponzi scheme, in which Shapiro made payments to investors using a web of shell companies. The action states that the fraudulent business model fell apart, the defendants filed for Chapter 11 bankruptcy protection.
As part of the disgorgement to be paid by the defendants, a Liquidation Trust is being formed under a plan in the Woodbridge Chapter 11 case in the U.S. District Court for the District of Delaware, which will distribute net proceeds from the disposition of the defendants' assets in bankruptcy. The amount to be distributed will depend upon the amounts collected by the Liquidation Trust.
All defendants consented to the entry of final judgements in the SEC case without admitting or denying the SEC's allegations. The defendants are prohibited from further violating the anti-fraud and other provisions of the federal securities laws.
Protecting the Aging Investor
It is important to note that this is the latest in a series of actions taken against alleged Ponzi schemes that have frequently targeted seniors and retirees. The SEC, in its December 2017 announcement of charged involving the defendants noted that many of the investors in Woodbridge were seniors.
The protection of elderly and aging investors ranks high on the list of SEC exam priorities for 2019. Financial professionals need to keep in mind the special challenges involved in working with senior investors that can make them susceptible to financial abuse.
Contact Jacko Law Group, PC, with any questions or concerns. Our attorneys can provide your firm with more information on how you can work to protect your senior clients and investors.
Robert Conca has over 19 years of experience advising businesses and financial professionals. He has acted both in legal counsel and senior executive capacities for companies spanning all stages of development. From start-ups to ...
Add a comment
- SEC Requests Proposals to Innovate Markets for Thinly Traded Securities
- PricewaterhouseCoopers LLP pays $7.9 to settle SEC Improper Professional Conduct, Auditor Independence Charges
- HCR Advisors Settles SEC Charges on Failure to Supervise and Implement Compliance-Related Policies and Procedures
- Amadeus Wealth Advisors, Three Bridge Wealth Advisors Settle SEC Unlawful Proxy Charges
- Charging Fees for Inactive Accounts can be as Problematic as Churning
- SEC: Prudential Failed to Disclose Conflicts of Interest to Fund Boards
- SEC Charges Investment Bank Junior Analyst with Insider Trading
- SEC Files Charges in Fraudulent Token Manipulation Scheme
- OCIE Risk Alert: Guidance for Compliance, Supervisory and Disclosure Procedures
- Jury Returns Verdict for SEC in Case Against Broker Charged with Fraudulent Excessive Trading
- Securities and Exchange Commission (SEC)
- Securities Law
- Advisers Act
- Investment Advisers
- Policies and Procedures
- Office of Compliance Inspections and Examinations (OCIE)
- Ponzi Scheme
- Form U5
- Aging Clients
- Due Diligence
- Virtual Currency
- Dodd-Frank Act
- Regulation Best Interest
- Transition Services
- Private Equity
- Private Funds
- Hedge Funds
- Regulatory Examinations
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Social Media Marketing
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Broker Protocol
- Wells Fargo