On behalf of Girard Bengali, APC on Monday, April 15, 2019.

Finance professionals in California and around the country who are accused of misconduct may face serious civil and criminal sanctions. A pending civil case against a brokerage firm called Securities America demonstrates the types of penalties that might be assessed.

A former financial adviser who was employed by Securities America reportedly misappropriated assets from a client’s accounts for years before he was caught. The client had hired him in 1999 and considered him to be a family friend. The value of the client’s account dropped from a value of $15 million to $50,000 during the time in which he managed it.

The adviser pleaded guilty to a charge of criminal fraud and is facing 10 years in prison when he is sentenced. He also agreed to pay $11.6 million and to forfeit some Rolex watches and other luxury items that he reportedly purchased. The client filed a lawsuit against Securities America for negligent supervision. While the independent broker-dealer settled with two of the adviser’s former clients in their lawsuits, it filed a motion to force this lawsuit into arbitration. The former adviser lost his license and is banned from ever working in the financial services industry again.

Financial professionals who have learned that they are being investigated for misconductmight want to talk to lawyers who have experience in these types of matters and who could try to protect their licenses, reputations, and careers. In some cases, the lawyers may be able to negotiate agreements to pay restitution in lieu of more serious penalties. They can often represent their clients in administrative licensure proceedings as well as in court during the related civil trials.

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