Understanding the Seriousness of the Allegations and Their Impact on Investors
In the world of finance, accusations of fraudulent activity are no laughing matter. Recently, the SEC reportedly leveled charges against Arete Wealth Management LLC, its affiliate Arete Wealth Advisors LLC, and selected representatives, including Joey Miller, Jeff Larson, and Randy Larson.
The charges revolve around a deceptive scheme involving an unapproved sale of shares valued at over $8 million from a Texas-based, unconventional oil and gas company, named Zona Energy Inc. between 2018 and 2020. The accused are said to have used unauthorized communication channels to hide their deeds and are suspected to have misguided investors with misleading statements about the company’s prospects while being offered discounted Zona shares in return.
These deceptive actions lead investors to suffer due to the potential loss of investment, mistrust in their brokers, and even underperformance of targeted funds due to misappropriation of assets.
As Warren Buffet put it, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” This is certainly a situation where investors will be feeling the loss of trust acutely.
Trivia: According to the SEC, 20% of the enforcement actions it took in 2020 were related to fraudulent activities by investment advisors.