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Alternative Market Briefing

SEC brings fraud charges against two Florida investment advisers

Thursday, November 21, 2013

Bailey McCann, Opalesque New York:

The Securities and Exchange Commission (SEC) brought charges against Gregory J. Adams and Larry C. Grossman, two Florida-based investment advisers. In the order, the SEC alleges that both men committed fraud by failing to truthfully inform clients about compensation received from offshore funds they were recommending as safe investments despite substantial risks and red flags. The advisers also are charged with contributing to violations of the "custody rule" that requires investment advisory firms to establish specific procedures to safeguard and account for client assets.

Opalesque previously reported that during the last round of examinations, nearly one third of funds faced issues with custodial procedures.

In this case, the accused men are alleged to have solicited and directed clients of their investment firm Sovereign International Asset Management to invest almost exclusively in funds controlled by an asset manager named Nikolai Battoo, who the SEC charged in a separate enforcement action last year. Grossman and Adams failed to inform clients about the conflict of interest in recommending these investments as Battoo was paying them ......................

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