Credit Suisse Unit and Ex-Investment Adviser Settle SEC Charges, Pay $8M Fine
Credit Suisse AG (CS) unit Credit Suisse Securities and Ex-investment adviser Sanford Michael Katz have settled SEC charges accusing them of improperly investing the funds of clients in “Class A” mutual fund shares instead of “institutional” shares that were less costly. According to the regulator, the firm and Katz did not adequately disclose the conflict of interest presented by choosing the Class A investment, which allowed them to profit more at investors’ expense. They are accused of breaching their fiduciary duties.
The SEC’s orders state that Credit Suisse made about $3.2M in 12b-1 fees that could have been avoided. According to the Commission, about $2.5M of those fees came from Katz’s clients. The regulator said that the firm did not put into place policies and procedures to prevent fiduciary breaches.
Both Credit Suisse and Katz settled the SEC charges without denying or admitting to the regulator’s findings. Together, they have to pay over $3.2M of disgorgement, over $577K of prejudgment interest, and an over $4.1M penalty. A fair fund has been set up to compensate clients.
Connecticut Man Pleads Guilty in $5M Investment Scam
In New Jersey federal court, James Trolice has pleaded guilty to securities fraud and transacting in criminal proceeds that defrauded over $5M from investors. Trolice is the ex-president and owner of Trolice Consulting Services, a New Jersey company. He also headed up eAgency, a company in California.
Trolice and another man, Lee Vaccaro sold investors interest in Trolice’s consulting company and companies that Vaccaro controlled. Meantime, they falsely represented that the companies had warrants, which are derivative securities, in eAgency.
Trolice admitted that starting in 2011, the monetary value of the interests the two men sold in the investment companies became greater than the dollar amount of the valid warrants that did exist. Meantime, they failed to tell investors that there was the risk that their investments could be negatively affected when additional interests were sold in the companies.
Vaccaro, who also pleaded guilty to his involvement in the securities fraud, is serving 78 months in prison.
Florida Asset Manager Faces Up to Five Years Behind Bars For Fraud Conspiracy
Steven Zoernack, a Florida money manager, has pleaded guilty to conspiracy to commit securities fraud. Now, he faces up to five years behind bars and he could be ordered to pay investors who were harmed nearly $2.9M in restitution.
Zoernack and others raised over $6M from at least 40 investors. It was his EquityStar Capital Management LLC that marketed a number of hedge funds to Canadian and American investors.
Zoernack took some of the money for himself. He failed disclose a number of material facts, including that: he was convicted of wire fraud in 2007, had filed for bankruptcy protection in the past, and owed hundreds of thousands of dollars to victims of a previous fraud. He also lied about his educational and educational credentials, along with the credentials of employees, as well as about his portfolio’s performance record.
At Shepherd Smith Edwards and Kantas, LTD LLP, our investment fraud lawyers work with investors throughout the US in recouping their investment losses. Please contact us today to request your free case consultation.
SEC Charges Credit Suisse and Former IA Representative With Breaches of Fiduciary Duty, SEC, April 4, 2017 (PDF)
Former Bergen Man Admits Defrauding Investors Out Of $5 Million, Patch, April 4, 2017
Florida Asset Manager Pleads Guilty To Investment Fraud Conspiracy, Justice.gov, March 31, 2017