Investment adviser Brenda Smith has been arrested and charged with defrauding about 40 investors of $105M. The US Securities and Exchange Commission (SEC) also has filed civil fraud charges against Strong, who is based in Philadelphia, and her Broad Reach Capital, LP (also known as the Broad Reach Fund), Broad Reach Partners, and registered investment advisor Bristol Advisors, LLC. The fund and the two entities are controlled by Strong.
According to the SEC, Smith told investors their money would go into publicly traded securities and that she would employ different trading strategies that had consistently rendered high returns in the past. Instead, contends the regulator, Smith made just a few investments using said strategies and spent investors’ funds on her own expenses, to pay back other investors, and on unrelated companies.
Smith is accused of sending out false information bragging about positive returns of more than 30% annually, claiming to hold billions of dollars in assets at a company belonging to her, creating fake documents to inflate the fund’s assets to more than $180M, and fooling investors into thinking their money was safe.
Investors are still owed over $63M in principal.
The alleged investment advisory fraud took place between 2016 and 2019. The SEC is accusing the defendants of the following:
- Breach of fiduciary duty
- Misrepresentations and omissions
- Engaging in a fraudulent scam
The SEC claims that Smith also used investors’ money to make her own trades while employing strategies that were not among the ones she touted to them. She also allegedly used their funds to pay some $2M in her own credit card bills.
Some investors invested millions of dollars with Smith. She has reportedly failed to honor investors’ redemption requests. The Commission said that most of investors’ money are no longer in the Fund.
Now, the SEC is seeking disgorgement, prejudgment interest, and civil penalties. It also has obtained an emergency asset freeze, as well as a temporary restraining order.
According to Justice.gov, in the criminal fraud case, Smith is charged with securities fraud and multiple counts of wire fraud.
Investment Adviser Fraud Claims
If Brenda Smith was your investment adviser and you invested in her Broad Reach Fund, suffering losses as a result, please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. We represent investors with their investment adviser fraud claims throughout the US.