A New Jersey investment adviser and her various related firms entered into a settlement agreement with the SEC involving the operation of a multi-million dollar investment fraud, primarily targeting elderly and unsophisticated investors (SEC v. Venetis, D. N.J., No. 10-CV-4493, 9/2/10).
According to the SEC's complaint, Sandra Venetis and her three firms, Systematic Financial, Systematic Financial Services LLC, and Systematic Financial Services, Inc., obtained at least $11 million from investors starting in 1997 to supposedly invest in promissory notes and fixed-income investments. Ms. Venetis told investors that the notes were federally guaranteed and would earn annual tax-free interest of six to 11 percent. However, instead of investing in such notes, Ms. Venetis used the funds to pay personal debts.
The SEC's charges also included violations by Ms. Venetis and her firms of the securities registration requirements under the Securities Act of 1933 as the notes were securities and neither registered nor exempt from registration, and anti-fraud violations under the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940.
Ms. Venetis and her firms agreed to settle the SEC's charges and consented to a court order that freezes their assets. The court order also states that payment of monetary penalties will be determined at a later date. The defendants also were enjoined from future violations of the securities laws and barred from future association with any investment adviser or broker-dealer.