As Warren Buffett wisely noted, “Only when the tide goes out do you discover who’s been swimming naked.” The financial tide has certainly receded for clients of Marat Likhtenstein, exposing what investigators allege is a classic case of investment fraud.
The financial community was rocked last month when FINRA regulators announced formal charges against former Osaic Wealth advisor Likhtenstein, accusing him of orchestrating what appears to be a textbook Ponzi scheme that defrauded investors of approximately $1.24 million. This case has sent ripples through investment circles and offers critical lessons for anyone entrusting their financial future to an advisor. According to a Bloomberg report, investment fraud and Ponzi schemes have been on the rise in recent years, with the FBI estimating that these scams cost investors billions of dollars annually.
The alleged fraud: How it unfolded
According to regulatory documents, Likhtenstein allegedly convinced clients—many of whom were retirees with limited investment knowledge—to transfer funds from legitimate investment accounts into what he described as “special high-yield opportunities.” These investments supposedly offered returns significantly above market rates, a classic red flag that went unnoticed by victims.
The mechanics were deceptively simple. Likhtenstein reportedly:
- Created falsified account statements showing extraordinary growth
- Used new investor money to make partial payments to earlier investors
- Convinced clients to keep their “special investments” confidential
- Diverted approximately $800,000 for personal use, including luxury purchases
The scheme began unraveling when several clients attempted to make substantial withdrawals simultaneously. A complaint filed by one investor seeking to withdraw $250,000 for medical expenses triggered internal reviews at Osaic Wealth.
For affected investors, particularly those nearing or in retirement, the impact has been devastating. Some victims reportedly lost over 60% of their retirement savings, with limited recourse for recovery. The emotional toll compounds the financial damage, as many clients had trusted Likhtenstein for decades.
“I built my retirement account penny by penny over forty years,” shared one investor who requested anonymity. “Now I’m working at 72 just to keep food on the table.”
The advisor: A trusted face with hidden history
Marat Likhtenstein (CRD# 2470480) presented himself as a seasoned financial professional with impeccable credentials. With 30 years in the industry, his professional biography highlighted his advisory role at Osaic Wealth since 2018, where he managed assets reportedly exceeding $75 million.
What clients didn’t see were the warning signs in his regulatory history. Before joining Osaic Wealth, Likhtenstein had accumulated three customer disputes between 2012 and 2017, all involving allegations of unsuitable investment recommendations. Two were settled for undisclosed amounts, while one was withdrawn.
His termination from Osaic Wealth came after the firm discovered undisclosed personal loan arrangements with clients—a serious violation of industry regulations and firm policies. Instead of cooperating with FINRA’s investigation, Likhtenstein refused to provide documents or testimony, resulting in an automatic permanent industry bar in early 2024.
Shockingly, a FINRA statistical analysis shows that financial advisors with previous complaints are five times more likely to generate additional complaints than those with clean records—a fact that underscores the importance of thoroughly researching any potential advisor. Investors can protect themselves by checking their advisor’s background on FinancialAdvisorComplaints.com, a comprehensive database of advisor misconduct records.
Breaking down the rules: What went wrong
The allegations against Likhtenstein involve violations of several fundamental FINRA rules, most notably FINRA Rule 2010, which requires members to observe “high standards of commercial honor and just and equitable principles of trade.”
In plain English? Financial professionals must act honestly and fairly. Creating fictitious investments, misappropriating client funds, and operating a Ponzi scheme represent the antithesis of these standards.
Additionally, the case likely involves violations of:
- FINRA Rule 3240: Prohibits borrowing money from or lending money to customers
- SEC Rule 10b-5: Forbids deceit, misrepresentations, and fraud in connection with securities
- FINRA Rule 8210: Requires cooperation with regulatory investigations
These rules exist for one simple reason: to protect investors. When violated, they expose clients to potentially catastrophic financial harm.
Lessons and moving forward
The Likhtenstein case offers several crucial takeaways for investors:
- Verify, then trust: Always check an advisor’s background through FINRA BrokerCheck
- Question unusually high returns: Consistent above-market performance usually signals heightened risk or potential fraud
- Maintain diversification: Never concentrate investments based solely on one advisor’s recommendations
- Demand transparency: Be wary of investments lacking clear documentation or requests for secrecy
For victims, limited recovery options exist. While Osaic Wealth may face arbitration claims for alleged supervision failures, the firm’s liability depends on multiple factors, including whether Likhtenstein’s activities fell within the scope of his employment.
The broader impact resonates throughout the industry. Firms are implementing enhanced supervision protocols, particularly for advisors managing retiree accounts, and regulators continue pushing for stricter oversight of financial professionals with complaint histories.
For everyday investors, the case serves as a sobering reminder that financial relationships require vigilance, regardless of an advisor’s apparent success or charisma. In matters of money, trust must always be verified. If you suspect misconduct by your financial advisor, contact the experienced securities attorneys at Haselkorn and Thibaut for a free consultation at 1-888-784-3315.
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