CFTC Orders Convergent Wealth Advisors Ordered to Pay $800K Securities Fraud Fine

The Commodity Futures Trading Commission says that Convergent Wealth Advisors must pay a civil penalty of $800K related to a commodity pool run by its former CEO David Zier. Zier committed suicide in 2014. That was also the year that a regulatory probe was begun around the private fund ZAM LLC that Zier operated.

Convergent compliance personnel staff were the ones who noticed that there were inconsistencies in some ZAM performance reports and account statements. In its securities case, the CFTC said that from 12/2010 and until Zier’s passing, there were $2.9M in fraudulent solicitations involving the private fund.

According to the CFTC, Zier put out false statements and made fraudulent representations to clients about the pool, which he ran as an outside business activity while working as an agent for the registered investment adviser. Zier purportedly represented ZAM as profitable even though it had sustained significant losses. He also allegedly made up performance data, which he gave to investors, to hide the losses.

Also, when ZAM sustained huge trading losses in 2007, Zier never told pool participants about the losses. Instead, he purportedly tried to make up for them by engaging in risky trading. This tactic, however, failed, and he had to solicit new investments to keep the commodity pool solvent.

The CFTC’s order instituting proceedings notes that Zier solicited Convergent Wealth Advisor clients in an effort to get them to invest in ZAM and he used some of the RIA’s resources, including operations personnel, to execute certain Zam-related transactions for clients.
Several of the firm’s clients became ZAM pool participants and Zier served as their investment adviser, which is when he recommended that they invest in ZAM.
If you suspect that your investment losses are due to investment adviser fraud, please contact Shepherd Smith Edwards and Kantas, LTD LLP today to ask for your free, no obligation, case consultation.

The CFTC Order in the Convergent Wealth Case (PDF)