Newscast Media WASHINGTON—The Securities and Exchange Commission today announced charges against a San Diego-based investment advisory firm and its president for allegedly steering winning trades to favored clients and lying about how certain money was being spent. The SEC has also been aggressively pursuing lawyers who defraud and short-change their clients, by lying about the actual settlement amounts that were disbursed, while keeping the bulk of the money.
The SEC’s Enforcement Division alleges that Ian O. Mausner and J.S. Oliver misused soft dollars, which are credits or rebates from a brokerage firm on commissions paid by clients for trades executed in the investment adviser’s client accounts.
Mausner and J.S. Oliver misappropriated more than $1.1 million in soft dollars for undisclosed purposes that in no way benefited clients, such as a payment to Mausner’s ex-wife related to their divorce.
“Mausner’s fraudulent schemes were a one-two punch that betrayed his clients and cost them millions of dollars,” said Marshall S. Sprung, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Investment advisers must allocate trades and use soft dollars consistent with their fiduciary duty to put client interests first.”
The SEC also charged Douglas F. Drennan, a portfolio manager at J.S. Oliver, for his role in the soft dollar scheme.
According to the SEC, Drennan participated in the soft dollar scheme by submitting false information to support the misuse of money belonging to his clients, and approving some of the soft dollar payments to his own company.
The SEC’s investigation, which is continuing, has been conducted by Ronnie Lasky and C. Dabney O’Riordan of the Enforcement Division’s Asset Management Unit in the Los Angeles Regional Office. The SEC’s litigation will be led by David Van Havermaat, John Bulgozdy, and Ms. Lasky. The examination of J.S. Oliver was conducted by Ashish Ward, Eric Lee, and Pristine Chan of the Los Angeles office’s investment
adviser/investment company examination program.