Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, January 31, 2011

SEC Charges Three New York Investment Firms with Misusing Clients' Funds

On January 20, 2011, the SEC charged three affiliated New York-based investment firms and four former senior officers with fraud, misuse of client assets, and other securities laws violations involving their $66 million advisory business.  According to the SEC, the operation's investment adviser William Landberg and president Kevin Kramer - through the firms West End Financial Advisors LLC (WEFA), West End Capital Management LLC (WECM), and Sentinel Investment Management Corporation - misled investors into believing that their money was in stable, safe investments designed to provide steady streams of income. However, in reality West End faced deepening financial problems stemming from Landberg's failed investment strategies. When starved for cash to meet obligations of the West End funds or for his personal needs, Landberg misused investor assets, fraudulently obtained more than $8.5 million from a bank, and used millions of dollars from an interest reserve account for unauthorized purposes.  The SEC also charged West End's chief financial officer Steven Gould and controller Janis Barsuk for their roles in the scheme.

According to the SEC's complaint filed in U.S. District Court for the Southern District of New York, the misconduct occurred from at least January 2008 to May 2009. The Commission seeks permanent injunctive relief against each defendant and disgorgement of ill-gotten gains with prejudgment interest against defendants and relief defendants.

http://lawprofessors.typepad.com/securities/2011/01/sec-charges-three-new-york-investment-firms-with-misusing-clients-funds.html

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