In a case involving charges of undisclosed compensation brought by the Securities and Exchange Commission, jurors in a Connecticut federal court returned a guilty verdict against an RIA firm and its owner.
The jury found that Westport Capital Markets, a registered investment adviser and its owner, Christopher E. McClure, defrauded clients by “repeatedly purchasing securities that generated significant undisclosed compensation, enriching themselves at their clients’ expense,” the SEC said in a release.
"Investment advisers cannot mislead their clients about conflicts of interest," said Adam Aderton, co-chief of the SEC's asset management unit.
Specifically, the trial determined that the “defendants acted intentionally, knowingly, or recklessly,” according to the release.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
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"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
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