In a case that may expose the ultimate in hypocrisy, the SEC alleges an advisor who counselled clients against risk-taking actually misappropriated $20-million to bankroll his own higher-risk investments.
“We allege that (Michael J) Oppenheim promised his customers that he would invest their money in safe and secure investments, but he seized their funds and aggressively played the stock market in his own accounts,” said Amelia A. Cottrell, associate director of the SEC’s New York Regional Office.
The SEC also alleges that the New York-based advisor abused his position as a private client advisor at a global bank by persuading some of his customers to withdraw millions out of their accounts, saying he’d purchase safe municipal bonds for them. However, that was not the case. None of the charges have yet been proven in court.
The SEC alleges that Oppenheim bought cashier cheques and deposited them into his own brokerage account or his wife’s account, which he reportedly controlled. After each theft, the SEC alleges, Oppenheim engaged in sizeable stock trading with companies like Google, Apple, Netflix and Tesla.
Oppenheim typically lost the entire amount of each deposit, and his brokerage accounts currently show minimal cash balances. And when his accounts had positive cash balances, he allegedly wired money to bank accounts in his or his wife’s name. At least one outgoing wire was used to pay off a portion of his mortgage, court documents suggest.
According to the SEC’s complaint filed in federal court in Manhattan, Oppenheim took “illicit steps to conceal his fraud.” For example, Oppenheim created false account statements when a customer asked for a statement reflecting his municipal bond holdings.
Oppenheim also reportedly pasted the customer’s name on to an account statement reflecting the holdings of another customer, and provided the fabricated statement to convince the customer that he had purchased the municipal bonds for his account as promised.
The SEC’s increasingly aggressive prosecution of errant advisors is something industry players on this side of the board applaud, arguing the press attention actually works to instill confidence in clients and the system’s ability to weed out bad apples. Canadian regulators across the wealth industry are increasingly seen as adhering to the same zero-tolerance policy, something advisors generally support although have some worry the bad PR may challenge investor support.