SEC obtains final judgment against California investment advisor in fraud case

On Behalf of | Sep 7, 2021 | Financial Advisor Misconduct

A former California investment adviser who pleaded guilty to fraud has been ordered to pay restitution to his victims, Financial Advisor reports.

The Securities and Exchange Commission announced it had obtained a final judgment in a civil case against Steven Fitzgerald Brown, who will have to pay $3.3 million to the clients he defrauded. The judgment was entered by the United States District Court for the Central District of California.

In September 2020, the SEC charged Brown with misappropriating or misusing investor funds for his own benefit.

Brown operated an investment company, Alpha Trade Analytics, Inc. and also was the accountant for a non-profit organization providing dance and theater arts education to children and young adults in Los Angeles.

According to the SEC, Brown solicited investments in Alpha Trade from people he met through his work with the organization, falsely promising that their investments would be used only for foreign exchange currency trading and that they would be guaranteed monthly returns of 10%.

But investigators said he used only a small portion of the funds for foreign exchange trading and instead used investor funds for his own personal expenses, including rent, car payments, and restaurant costs, as well as paying other investors. Brown also gave his investors statements with fabricated returns purporting to show steady gains.

In June, Brown pleaded guilty to charges of criminal wire fraud and was sentenced to 52 months in prison.
In the civil case, he was ordered to pay restitution of $700,000 that he had embezzled from the non-profit organization. The rest of the $3.3 million will be paid to about 10 victims.

Under terms of the final judgment, the SEC said that Brown was permanently enjoined from violating the antifraud provisions of 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), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.

Lewitas Hyman represents financial professionals, financial institutions and investors in investment loss, employment and disclosure matters, and in regulatory investigations. Contact us by phone at (312) 291-4600 or through our online contact form for a free consultation.

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