Portfolio Advisors Alliance Charged by SEC

On February 3, 2016 the SEC charged Portfolio Advisors Alliance, Inc. an New York broker dealer with violations of the United States securities laws, specifically section 10(b) of the Securities Exchange Act of 1934.

The SEC’s complaint stems from a private placement offering of securities in a company known as American Growth Funding II, LLC (“AGF II”)

American Growth Funding was formed to provide high-risk, high-interest loans to businesses that had difficulty obtaining credit from conventional lenders.

Portfolio Advisors Alliance sold over $8,000,000 of AGF II to clients in a private placement from 2011 to 2013. More than 80 investors who were told they would receive a twelve percent rate of return purchased the shares . However, according to the SEC’s complaint filed in the US District Court for the Southern District of New York, investors were not told that AGF II’s primary asset had lost substantial value, and therefor jeopardized the likelihood that they would be repaid their original principal.

The SEC contends that the principals of PAA knew that there were material omission in the private placement memorandum for AGF II, but failed to take steps to correct errors, or to instruct PAA’s registered reps to notify clients of the inaccuracies.

The SEC’s complaint seeks permanent injunctions, disgorgement, civil money penalties, and other relief.

The claim filed by the SEC is not final, and until the allegations have been proven in a court of law, no adverse inferences should be drawn.

 

Portfolio Advisors Alliance registration and disciplinary history

In order to lawfully sell investments to the public, one must either be registered or exempt from registration. Portfolio Advisors Alliance is registered with the SEC, two self-regulatory organization and in 52 states and territories.

According to FINRA’s CRD disclosure report, Portfolio Advisors Alliance is a Delaware corporation formed in 2015, and has been the subject of three regulatory investigations.

The Law Office of David Liebrader practices exclusively in the field of investment loss recovery. For the past 23 years, we have dedicated our law practice to assisting investors who have been victims of investment fraud via fraudulent and unsuitable investment transactions. During that time we have recovered money for over one thousand individuals, pension plans, trusts and companies. The recoveries we have obtained via judgments, awards and settlements on behalf of our clients exceed $40,000,000.

When investors contact our firm they can expect prompt attention, and a detailed analysis of their issues. Typical claims that we are asked to review involve “unsuitability (where a financial advisor makes investment recommendations that are inconsistent with a customer’s investment objectives), claims for “churning” (where a broker enters into an excessive number of trades for the purpose of generating commissions), claims involving illiquid investments such as private placements (I.e., real estate investment trusts, limited partnerships, equipment leasing and oil and gas drilling programs) as well as claims for violations of state securities laws, which often provide investors remedies like attorney’s fees and interest, if they are successful on the claim.

Since a Supreme Court ruling in the 1980s, most investment related disputes between brokerage firms and their customers have been filed in an arbitration forum hosted by FINRA Dispute Resolution. FINRA, along with the SEC, serves as a securities industry “watchdog” and regulator. Most brokerage firms require their clients to sign binding arbitration agreements, mandating that any disputes between them be arbitrated at FINRA.

Investors pursuing claims at FINRA typically advance claims related to suitability. FINRA rules require that all registered representatives make suitable investment recommendations to their clients. Other claims are based on negligence or breach of fiduciary duty, while another category includes claims based on misrepresentations and fraud. Most claims filed with FINRA are resolved within 15 months, and oftentimes, the cases are resolved via settlement or mediation in under a year.

FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).

If you suspect that you have been the victim of investment fraud, or had a financial advisor recommend unsuitable investments to you, call us today for a free, confidential consultation at (702) 380-3131.