Ladenburg chairman Phillip Frost steps down

Ladenburg chairman Phillip Frost steps down
The SEC charged Frost with fraud earlier this month.
SEP 21, 2018

Dr. Phillip Frost, who was charged this month with fraud, said Thursday evening that he was retiring as non-executive chairman of Ladenburg Thalmann Financial Services Inc. Dr. Frost and nine other individuals were charged Sept. 7 in a Securities and Exchange Commission lawsuit with participating in "long running schemes that generated over $27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock," according to the SEC's complaint. Dr. Frost is the largest shareholder in Ladenburg Thalman, controlling about 36% of the broker-dealer's shares Along with his role at Ladenburg Thalmann, Dr. Frost is a well-known biotech investor in South Florida. Since March 2007, he has served as chairman of the board and CEO of OPKO Health Inc., a multinational biopharmaceutical and diagnostics company, according to Ladenburg Thalmann's annual proxy statement. Ladenburg Thalmann is one of the leading networks of independent broker-dealers. Its B-Ds include Securities America Inc., Triad Advisors, Investacorp Inc. and Securities Service Network, which are home to 4,300 independent contractor brokers and financial advisers. Richard Lampen, Ladenburg Thalmann's CEO and president, will replace Dr. Frost as chairman. Adam Malamed, the firm's executive vice president and chief operating officer, will join the firm's board of directors. "I have decided to retire from the Ladenburg board and will concentrate my efforts on OPKO Health and my philanthropic interests," Dr. Frost said in a statement, making no mention of the SEC's fraud charges. "As a long-term shareholder, I am confident in Ladenburg's outlook and look forward to its continued growth and success." "Ladenburg would not be where it is today without [Dr. Frost's] many contributions, and his presence in the boardroom will be sorely missed," Mr. Lampen said. Some had been calling for Dr. Frost to resign, saying that the reputational risk he created for Ladenburg would only increase the longer he stayed with the firm. The SEC's complaint describes in elaborate detail the efforts that Dr. Frost and his associates allegedly made to pull off what the SEC called "classic pump-and-dump schemes." "From 2013 to 2018, a group of prolific South Florida-based microcap fraudsters led by Barry Honig manipulated the share price of the stock of three companies in classic pump-and-dump schemes," the SEC alleges. "Miami biotech billionaire Phillip Frost allegedly participated in two of these three schemes." The companies were not identified by the SEC. Mr. Honig "allegedly orchestrated the acquisition of large quantities of the issuer's stock at steep discounts, and after securing a substantial ownership interest in the companies, Honig and his associates engaged in illegal promotional activity and manipulative trading to artificially boost each issuer's stock price and to give the stock the appearance of active trading volume," according to the SEC. Mr. Honig and his associates then dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors, the SEC alleges.

Latest News

Farther debuts AI investment proposal tool for advisors to win clients
Farther debuts AI investment proposal tool for advisors to win clients

"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

Are you optimally efficient?
Are you optimally efficient?

Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.

Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida
Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida

Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.

Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B
Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B

The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.