High-profile adviser facing private-placement dust-up

A broker whose employment record is littered with customer complaints over variable annuities is now the focus of investor lawsuits over highly illiquid and risky private-placement investments.

The broker, Bambi Holzer, has 42 settled customer disputes, according to information posted by the Financial Industry Regulatory Authority Inc. Four other disputes against her are pending, including one $200,000 investor claim based on the sale of private placements.

And other investors’ claims stemming from Ms. Holzer’s sale of private placements, specifically Provident Royalties LLC, may be in the offing, said Scott Silver, a plaintiff’s attorney.

Ms. Holzer is currently a registered representative affiliated with two firms: Wedbush Morgan Securities Inc. and Sequoia Equities Securities Corp.

Variable annuities and private placements are high-commission products. Regulators this year and last have been combing the records of broker-dealers that sold private placements.

In January, investors who are clients of Mr. Silver filed a $1.7 million lawsuit against Wedbush Morgan, with Provident Royalties named as one of the investments that contributed to the losses of the clients.

The clients’ names were altered on the version of the lawsuit obtained by InvestmentNews.

TALKING TO INVESTORS

Ms. Holzer’s record in the securities business “is one of the most shocking CRDs I’ve seen in my career,” Mr. Silver said, referring to the records kept at Finra’s Central Registration Depository, a warehouse of information about licensed stockbrokers.

Mr. Silver said he was speaking to other investors who worked with Ms. Holzer about the sale of Provident Royalties private placements.

Ms. Holzer, however, is not named in the January lawsuit, although she sold the clients the investments, Mr. Silver said. The lawsuit alleges that Wedbush Morgan misrepresented Provident and a mutual fund “as safe investments and failed to warn its customers about red flags that should have been apparent.”

Not naming Ms. Holzer is a legal tactic, Mr. Silver said. “I didn’t name her, because I think broker-dealers are trying to make these cases a point-of-sale claim, and shift blame to the broker,” he said.

Last summer, the Securities and Exchange Commission charged Provident with fraud. The firm allegedly sold $485 million in private securities to investors. This month, Finra expelled Provident Asset Management LLC, the broker-dealer arm of the Provident operation.

That firm marketed a series of fraudulent private placements through Provident Royalties in a massive Ponzi scheme, Finra said.

Eric Segall, a spokesman for Wedbush Morgan, said that Ms. Holzer was the only broker at the firm who sold Provident private placements — and then only to a very small number of clients. The firm has “really small exposure” to Provident offerings, and stands behind its due diligence, he said.

Mr. Segall said that almost all of the prior customer complaints against Ms. Holzer stemmed from annuity sales of a product that saw its terms change.

“That affected her entire customer base,” he said.

Ms. Holzer has worked with seven other firms since 1983, according to her Finra record on BrokerCheck.

The website of her firm, Bambi Holzer Financial Group, says that Ms. Holzer has appeared on such television shows as “Today,” and “Fox on Money,” as well as on CNN and CNBC. She is the author of four books, including “Financial Bliss: A Couple’s Guide to Merging Money Styles and Building a Rich Life Together” (Amacom, 2007).

Tom Fehn, Ms. Holzer’s lawyer, said that, similar to the investor claims about variable annuities, any claims about Provident were due to the product, not the broker.

“It’s a product failure, not a broker failure,” he said, noting that thousands of other brokers sold Provident Royalties offerings. In total, Ms. Holzer sold about $2 million of Provident private placements, he said.

E-mail Bruce Kelly at [email protected].