A registered investment adviser in Texas has had his license revoked due to conflicts stemming from the sale of $5 million worth of Future Income Payment notes and promissory notes issued by third-party real estate developers.
The adviser failed to disclose excessive commissions, misuse of client funds and conflicts of interest, according to the Texas State Securities Board.
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According to an order issued by Texas Friday, from 2011 to 2017, the adviser, George A. Marwieh, and his eponymous, Austin-based firm sold almost exclusively the Future Income Payment investment and real estate notes.
Future Income Payments is an alleged investment fraud that attorneys claim cost more than 1,000 investors, many of whom were retirees, at least $100 million in lost savings. Future Income Payments sold investments that promised an income stream based on the repackaging of income from pension plans.
Mr. Marwieh sold 23 clients $2.3 million of Future Income Payments investments and received $115,000 in commissions. He sold nine clients a total of $2.3 million
of the real estate development notes and generated $228,000 in commissions. He also charged clients an annual asset management fee of 1% to 2%, according to the Texas order.
The adviser "provided no on-going management of these securities," according to the Texas order, and was not registered as a dealer when he was paid the commissions.
"This financial incentive for [Mr. Marwieh and his firm] to recommend the [Future Income Payments] and development notes to their clients raised a conflict of interest," which Mr. Marwieh did not disclose, the Texas order said.
In fact, Mr. Marwieh stated on his Form ADV that he would not get external compensation for the sale of securities or recommend to clients securities in which he had a "material financial interest," according to the Texas order.
He also used investor funds "for purposes that were not disclosed to or authorized by investors," according to Texas.
Mr. Marwieh, who consented to the Texas order, could not be reached to comment. His attorney, Jeremy Wagers, did not return a call to comment.
