The Securities and Exchange Commission has charged twin-brother brokers with misappropriating a total of more than $5 million from advisory clients.

Adam S. Kaplan and Daniel E. Kaplan engaged in a yearslong string of illegal activities that victimized at least 60 clients, the SEC alleged in a lawsuit filed Friday.

The 35-year-old Kaplans began their brokerage careers with simultaneous registrations at Morgan Stanley in August 2016, and they jumped to Merrill Lynch in May 2017, according to BrokerCheck.

The SEC alleges that, sometime around May 2018, after having been terminated by Merrill Lynch and joined New York–based IHT Wealth Management, the brothers began secretly inflating the fees they charged clients, assessing a fee of 1.25% to 2.95% to clients who typically had agreed to a fee of 1% or less. In some instances, the SEC claims, the Kaplans had clients sign advisory agreements in which the fee had been left blank, so the Kaplans could later insert a fee amount greater than the orally agreed-upon fee. According to the SEC’s complaint, the overbilling scheme alone involved at least 54 clients and netted the twins a total of at least $540,000.

The SEC further alleges that the Kaplans misappropriated client funds to cover their own lavish expenditures for items such as jewelry, apparel and hotel stays. In some instances, the misappropriated funds were instead used as “Ponzi-like payments” to reimburse clients who had complained about the Kaplans’ misconduct, the lawsuit asserts. The misappropriated funds totaled at least $4.5 million and were typically obtained through account transfers using payment-processing applications, such as PayPal, Venmo and Zelle, according to the SEC.

In one instance outlined by the SEC, Daniel Kaplan misappropriated funds from one client, referred to as Client F, by altering checks, the SEC alleges.

“Client F wrote four checks payable to Daniel Kaplan, which Daniel was to use for home repair projects for Client F’s elderly mother,” according to the SEC. “Before Daniel Kaplan deposited the checks, he changed the amounts written on the checks and kept the proceeds, thereby misappropriating over $36,000.”

The Kaplans eventually oversaw a group of some 277 clients, including relatives, friends and/or neighbors, many of whom were unsophisticated investors who followed the Kaplans from firm to firm, according to the SEC.

In July 2021, IHT Management fired the Kaplans. According to BrokerCheck, the twins had been discharged for overbilling clients. Their Merrill terminations some three years earlier were a result of having used “client logon credentials to access client accounts,” per BrokerCheck.

Soon after leaving IHT Wealth Management, the Kaplans moved to Global Assets Advisory, a registered investment advisor firm based in Pompano Beach, Florida, but their terms there lasted less than 10 weeks, according to BrokerCheck, which does not indicate how their employment ended. Neither has registered at a firm since leaving Global Assets Advisory.

The SEC’s lawsuit comes four weeks after Eastern District Magistrate Judge James Wicks denied motions to quash SEC subpoenas seeking the Kaplans’ financial records.

The Kaplans’ attorney, Vincent Ancona, of Mineola, New York–based Ancona Associates, called the SEC’s allegations “false and far reaching” in an emailed statement to FA-IQ. “It is our belief that after our presentation of a detailed rebuttal in this case that our clients will be exonerated of all the charges being levied against them,” Ancona said.

An IHT Wealth Management executive did not respond to a telephone call seeking comment, and a Merrill Lynch spokesperson did not respond to an emailed request for comment.

link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *

https://ltg-academy.ch/wp-includes/situs-judi-slot-terbaik-dan-terpercaya-no-1/