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Broker Charged with Taking More Than $1.4 Million from Clients

Marc D. Broidy has been charged by the SEC with allegedly pilfering $1.4 million from clients using 3 separate schemes.  Broidy is the sole owner and principal of Broidy Wealth Advisors, LLC.  He is alleged to have stolen assets of his clients to pay for his mortgage, lease two luxury cars and take multiple trips overseas, among other things.  Broidy allegedly obtained his ill-gotten gains through three schemes involving overbilling his clients, misappropriating $865,318 from trusts in which he was the trustee, and making material misrepresentations and omissions to clients.

In the first scheme, Broidy is alleged to have overbilled his clients by $643,000.00 and then attempting to cover it up by altering the fees on 1099 forms that were issued by brokerages before sending those forms to his clients or their accountants.  The second way he allegedly stole money was to take $865,318.00 from trust accounts of which he was the trustee.  To cover this theft, he supposedly sold trust shares that he owned personally.  The proceeds from that sale were supposed to go back to the trusts, but they never did.  Finally, he is alleged to have lied to his clients regarding their investments in privately held companies with which he had an affiliation.  He did not inform his clients about his relationship with those companies or that he was compensated by those companies for soliciting the investments.

The SEC is seeking to have Mr. Broidy (a) barred from the securities industry, (b) pay back his clients the money that he allegedly stole, (c) pay civil monetary penalties pursuant to Section 20(d) of the Securities Act, Section 21(d)(3) of the Exchange Act, and Section 209(e) of the Investment Advisers Act, and (d) barred from serving as an officer or director of a public company pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act.

If you want to read more about this case, then click on the following link: https://www.sec.gov/litigation/complaints/2016/comp23679.pdf.  This case provides a good example of the very serious nature of the fiduciary duties owed to the clients of a broker/dealer.  If you have any questions about whether your actions comply with these duties, then please contact Tomlinson & Shapiro at (312) 715-8770.

This post was written by Michael Tomlinson

Michael Shapiro
(312) 715-8770
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