SEC bans Lee Weiss from the brokerage and investment advisory industry

Massachusetts resident Lee Weiss is barred from the brokerage and investment advisory industry for his fraudulent scheme involving a French company that claimed it could reduce the harmful effects of tobacco smoking, according to the Securities and Exchange Commission. Mr. Weiss, who resides in Newton, Mass., and his firm Family Endowment Partners LLC will pay about $8.4 million in relief to investors he duped, according to an SEC litigation announcement Wednesday. They've also been ordered to pay a combined $1.5 million civil penalty. The SEC alleged that from 2010 to 2012 Mr. Weiss and his registered investment advisory firm fraudulently advised clients and hedge funds to invest more than $40 million in securities issued by companies owned by Biosyntec, which claimed to have developed a cigarette filter that reduced the risk of lung cancer. Mr. Weiss held shares in the French company, which paid him more than $600,000 shortly after the investments were made. In settling the SEC's allegations, Mr. Weiss neither admitted nor denied its findings. The agency, which last year filed a complaint against him in federal court in Massachusetts, alleged he failed to disclose conflicts of interests to clients and how their investments were used. In 2011, for example, Mr. Weiss advised a client of Family Endowment to invest $2.5 million in a Biosyntec subsidiary, knowing the money would be used to pay delinquent interest owed to other clients of the firm, according to the SEC's complaint. He also recommended customers buy $8.25 million in the company's notes and stock, failing to disclose that the funds would pay financial obligations rather than benefit the company in which they invested. He also failed to disclose the "signficiant risk" that the notes would never be repaid. Mr. Weiss is the owner of Newton, Mass.-based registered investment advisory firm Family Endowment Partners. He was a registered representative with MIP Global Inc., a broker-dealer based in Puerto Rico, from June 2012 until February 2016, according to the SEC. Efforts to reach Mr. Weiss weren't immediately successful.