California Investment Advisory Firm Charged with Breaching Fiduciary Duties
May 5, 2014
May 5, 2014 — It is a crime for investment advisory firms to mislead clients or potential investors. To fight illegal investment fraud
, the U.S. Congress established a whistleblower program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Tipsters who alert the Securities and Exchange Commission (SEC) to misconduct by investment advisors may be entitled to a reward for notifying the government. Informants receive rewards equivalent to as much as thirty percent of the amount the government collects, so long as the total recovery exceeds $1 million.
San Diego Investment Adviser Allegedly Provided Investors with Misleading Information
A California investment advisory firm, its CEO, chief compliance officer, and an employee have been charged by the SEC
with breaching their fiduciary duties to firm clients and misleading investors.
Total Wealth Management, based in San Diego, and Jacob Cooper, its owner and CEO, allegedly paid themselves “revenue sharing fees” — essentially kickbacks for making investment recommendations — which they failed to disclose to clients or to potential investors. They also allegedly neglected to disclose the conflicts of interest these agreements caused when the underlying investments were recommended to clients and investors in the Total Wealth’s Altus group of funds. Cooper and Total Wealth also are alleged to have made material misrepresentations concerning the extent of the due diligence performed on recommended investments. Similar charges were leveled against Nathan McNamee, Total Wealth’s CCO and Douglas Shoemaker, an investment adviser with the firm. The two allegedly defrauded clients and breached their fiduciary duties by hiding their own conflicts of interest and concealing the kickbacks they were paid when they recommended investments.
Whistleblowers Collaborate with the SEC on Investment Fraud
Investment advisory firm employees who encounter schemes that mislead clients and potential investors need to understand how the Dodd-Frank whistleblower program works before contacting the SEC. The qui tam lawyers at Waters & Kraus have the experience necessary to protect whistleblowers’ interests in investment fraud cases. Contact us by email
or phone our securities fraud lawyers at 855.784.0268 to discuss how we can help you help your firm’s clients and other innocent investors.