RIA Fined $2.8M And Owner Barred From Securities Industry

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RIA Fined $2.8M And Owner Barred From Securities Industry

The SEC has fined a former registered investment adviser $2.8 million and barred its owner, Jacob Cooper, from the securities industry. Cooper, who is known as a “Main Street Madoff” by his ex-clients, is alleged to have defrauded investors by using a kickback scheme that caused about $44 million in losses.

The owner of San Diego’s Total Wealth Management and former host of the radio show “Uncommon Wealth,” The SEC believes Cooper put the majority of the $100 million in assets he received under management at the firm with alternative investments or hedge funds that he controlled and then invested in entities with revenue sharing agreements.

The SEC additionally alleges that Cooper failed to perform due diligence on the investments. At minimum, one of the investments was discovered to be a Ponzi scheme. Another investment was found to be insolvent at its inception.

Between 2009 and 2014, Total Wealth Management earned $1.3 million from the revenue sharing agreements, and Cooper himself received approximately $2 million in total compensation.

The SEC’s fine of $2.8 million consists of $750,000 in civil penalties and $1.8 million in disgorgement.

Cooper defended himself by denying the SEC’s allegations. According to him, he explained the risks of the investments to his clients, who knowingly took on those risks. He also claimed that he did, in fact, perform satisfactory due diligence, stating that the Ponzi scheme investment had gotten a five-star rating from Morningstar Inc. and that he rejected a number of investments that did not meet his standards. Furthermore, he argued his disclosures were satisfactory.

Brenda P. Murray, chief administrative law judge at the SEC, was not persuaded, and in her order wrote that Cooper showed “a total lack of understanding or remorse,” which “indicates a high likelihood of future violations and necessitates an imposition of the broadest possible sanction.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

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