In a stunning fall from fortune, a former broker to the rich and famous, Bambi Holzer, agreed Thursday to a settlement with the Financial Industry Regulatory Authority Inc. that bars her from the securities industry.
Best known for counting former “Seinfeld” star Julia Louis-Dreyfus as a client, Ms. Holzer had been suspended by Finra since September. Her BrokerCheck report is a staggering 115 pages in length.
Finra in October sued Ms. Holzer for allegedly lying to one of her former broker-dealers, Wedbush Morgan Securities Inc., about several clients' net worth when she sold preferred shares of one of the deals issued by Provident Royalties, which later was revealed to be a $485 million Ponzi scheme.
She also allegedly failed to report a pending regulatory action on her employment history, according to Finra.
In the settlement, Ms. Holzer didn't admit or deny Finra's allegations.
Finra recently said that it is increasing its efforts to keep a close watch on brokers who are repeat offenders.
Ms. Holzer's attorney, Rex Beaber, on Friday said that his client “was placed in a position where she could fight the disciplinary procedure at extraordinary personal cost, both psychologically and financially. She elected to surrender in the light she wasn't going to continue in the securities industry.”
Without going into detail, Mr. Beaber said that Ms. Holzer doesn't like some aspects of the settlement and that she and her mother had invested in Provident as well as an offering by Behringer Harvard Holdings, one of the biggest fundraisers for nontraded real estate investment trusts before the financial collapse of 2008.
Ms. Holzer's “clients for years made gobs and gobs of money,” he said.
“She took risks that were livable and became unlivable. This is not a broker defrauding or willfully deceiving clients,” Mr. Beaber said.
Ms. Holzer, 55, began her career in 1983 as a broker with the long-defunct E.F. Hutton & Co. Inc. In total, she worked for 10 broker-dealers, being affiliated , most recently with independent broker-dealer Newport Coast Securities Inc.
Ms. Holzer wrote books, made television appearances and counted as her most famous client Ms. Dreyfus, who wound up suing the broker and one of her numerous former securities firms in 2007 in a dispute over $4.4 million invested in annuities. That suit was later settled.
Ms. Holzer and her firm at the time, UBS PaineWebber Inc., paid out at least $11.4 million to settle dozens of investor claims that she misrepresented variable annuities by saying that they offered guaranteed returns, according to a 2009 Forbes article titled “Beware of Your Broker.”
The settlement Thursday with Finra includes descriptions of transactions with six clients to whom she sold Provident shares.
Ms. Holzer made the recommendations for the unsuitable transactions in February and March 2008, according to the settlement.
Provident had promised investors annual dividends of 18% but stopped paying those in January 2009. That July, the Securities and Exchange Commission charged Provident with fraud.
Ms. Holzer knew or should have known that clients' disclosure agreements with Wedbush Securities were inaccurate, and she overstated her clients' liquid net worth, according to the settlement.
Provident, a Regulation D private placement, was to be sold to accredited investors, who at the time needed to have a net worth of at least $1 million or income of $200,000 for two consecutive years.