On December 8, 2015 the SEC announced that it had settled their action against Covenant Partners, L.P., a Philadelphia-area private equity fund.
Prior to this development, the SEC had brought an action against Covenant Partners along with Bill Fretz and his unregistered investment adviser, Covenant Capital Management Partners, L.P.
According to the SEC’s order Bill Fretz orchestrated a fraud through Covenant Capital Management Partners, L.P. and the private equity fund he managed, Covenant Partners, L.P.
Bill Fretz sold partnership interests in the fund to family and friends but rather than investing the money as promised, used it to benefit himself. Bill Fretz and his colleague Jack Freeman funneled more than $1 million to Keystone Equities Group L.P., a failing broker-dealer that they operated and controlled, paid themselves nearly $600,000 in performance fees they had not earned, and used fund assets to repay personal obligations. Covenant filed for bankruptcy in September 2014.
Under the terms of the settlement, the fund, jointly and severally with the other respondents, owes approximately $5.8 million to the SEC.
Bill Fretz’ registration and disciplinary history
In order to lawfully sell investments to the public, one must either be registered or exempt from registration. Bill Fretz was registered with:
According to FINRA’s CRD disclosure report, Bill Fretz has been the subject of one customer complaint and two 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.