A former registered investment advisor has been charged with misappropriating over $800,000 worth of securities from twelve of his investment advisory and brokerage clients, Financial Advisor reports.
The Securities and Exchange Commission filed a complaint in the U.S. District Court for the District of Oregon against the advisor, Jeffrey Higgins.
The SEC alleged that between September 2017 and February 2024, Higgins misappropriated clients’ securities through a sham investment program that he created called “Cumulus” while working as both a registered representative and investment advisor representative at a dually registered firm.
“According to the complaint, Higgins falsely told clients that he had created an investment program to purchase discounted securities at a third-party transfer agent, and then sell the securities for a profit,” the SEC stated. “The complaint alleges that, in reality, Higgins used client funds to purchase securities at the transfer agent without any discount, and used falsified documents and signatures to divert some of those securities to his personal brokerage account.”
The SEC alleges that Higgins used a bulk transfer process to move securities and created falsified documents to facilitate the transfers, and then concealed the activity by sending clients fictitious reports through a personal email account, overstating account values and masking losses tied to the scheme.
Higgins’ scheme reportedly came to light when he could not meet a client withdrawal request and then admitted his misconduct internally at his former firm, Western International Securities.
Higgins was charged with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks permanent injunctions, including conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties.
In 2024, Higgins consented to be barred from the securities industry by the Financial Industry Regulatory Authority after FINRA said he refused to provide documents and testimony requested during an investigation that stemmed from a regulatory tip.
His former firm reported in a termination filing that Higgins disclosed he had been misdirecting and misappropriating client funds for years.
The attorneys at Hyman Cotter have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter at (833) 665-0784 or through our online contact form for a no-cost evaluation of your matter.
