SEC Prevails Against IA on Summary Judgement

Investment advisers have long been one of the key focus area for SEC Enforcement. Today is no different. Investment advisers continue to be an important area for enforcement.

Cases against advisers frequently turn on undisclosed or inadequately disclosed conflicts of interest. Since advisers have a fiduciary duty to act in the best interest of their clients, an inadequately disclosed conflict breaches the duty. Other cases are based on the misappropriation of client assets. The Commission’s most recent case in this area is one based on misappropriation, SEC v. Boucher, Civil Action No. 20CV1650 (S.D.Ca. 2020).

Mark J. Boucher and his firm, Strategic Wealth Advisor Group Services Inc., are named as defendants in this case. Mr. Boucher has worked for an investment adviser for the last 19 years. He worked for Investment Adviser A from 2010 through 2016 and Investment Adviser B from 2016 through 2019. The firm was a state registered investment adviser in 2019.

The complaint is based on three multi-year frauds in which Mr. Boucher misappropriated over $2 million in client funds. While working for Advisers A and B Defendant Boucher defrauded Client A by misappropriating almost $700,000 from her advisory accounts. A variety of deceptive conduct was used, including forging checks and even withdrawing funds on margin when he wanted more cash than was available. In addition, about $60,000 was misappropriated from Client B’s advisory accounts by wiring sale proceeds from the account using a phone call in which Mr. Boucher impersonated the client.

After Client C passed away, Mr. Boucher misappropriated about $1.5 million from the trust accounts by moving the funds to his personal accounts. He also took steps to conceal his actions from the firms and later the staff during the investigation. The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Advisers Act Sections 206(1) and 206(2).

Following discovery, the Court granted the Commission’s motion for summary judgment in an order dated On February 8, 2022. The Court concluded that the agency was entitled to judgment on each of its charges. In reach this conclusion the Court found that the undisputed facts established scienter and stole the client funds. That ruling was based in part the Court’s conclusion that Defendants, in their Opposition, failed to establish there were material facts in dispute because the documents offered and relied on were not authenticated. The Court also denied Defendant’s renewed motion to stay the action in view of an ongoing, parallel criminal proceeding. Remedies will be considered at a later date. See Lit. Rel. No. 25329 (February 11, 2022).

Tagged with: , ,