9.29.2009 The Securities and Exchange Commission (SEC) charged Stratum Wealth Management, LLC, and Charles B. Ganz, both based in Boca Raton, Fla., with violating the anti-fraud provisions of the securities law, including the Investment Advisers Act of 1940, for misappropriating funds from a client’s account for nearly a year. The SEC alleged that Ganz misappropriated approximately $400,600 of client assets to pay for his personal expenses. In addition, Stratum, according to the SEC, purchased bonds for the accounts of two clients, at a price that Ganz knew was significantly higher than the value of the bonds, in order to transfer the investment and avoid losses for another client who threatened legal action against Stratum. Moreover, from at least January 2006 through October 2006, Stratum sent its clients misleading monthly statements, which falsely implied that the current market value or fair value of restricted securities that each client owned was equivalent to the market price of freely-trading stock. Stratum and Ganz also failed to disclose a material conflict of interest and that Stratum’s financial condition was severely impaired. Finally, Stratum failed to maintain required books and records and failed to maintain an accurate Form ADV.
Click http://www.sec.gov/litigation/admin/2009/33-9067.pdf for the administrative action.