ADVISER CHARGED WITH USING CLIENT MONEY TO FUND LAVISH LIFESTYLE

SEC HQs 2In her 1970 song, Janis Joplin asked, “Oh Lord, won't you buy me a Mercedes Benz?” In October 2016, the SEC alleged in a civil enforcement action that an investment adviser also wanted a free Mercedes, but he sought out different benefactors—his clients.

The SEC filed suit in the U.S. District Court for the Eastern District of New York against Marc D. Broidy and his firm, Broidy Wealth Advisors, LLC.  As alleged, Broidy and the firm fraudulently overbilled clients and stole assets from their trusts to pay personal expenses. The SEC claimed that Broidy used client funds to pay his home mortgage, to take expensive vacations and to lease two Mercedes-Benz vehicles.

The Commission alleged that Broidy billed clients approximately $643,000 in excess fees, and covered up the misconduct by altering the amount of management fees recorded on forms issued by brokerage firms. He also allegedly misappropriated approximately $865,000 in assets from client trusts for which he served as trustee, and misled clients about investments they made in privately-held companies without advising the clients that he was affiliated with those companies.

In addition to the civil enforcement action, the U.S. Attorney's Office for the Eastern District of New York filed criminal charges against Broidy.

Read more about the case in this article.

SEC v. Broidy , C.A. No. 1:16-cv-5960 (E.D.N.Y Oct. 27, 2016).