An RIA whose CEO apparently committed suicide two years ago was hit with an $800,000 fine Monday for fraud committed by the CEO.
The Commodity Futures Trading Commission ordered Convergent Wealth Advisors to pay the $800,000 civil penalty in connection with a commodity pool run by David Zier, the firm's former chief executive.
According to the CFTC, Mr. Zier made fraudulent representations and issued false statements to clients in connection with the commodity pool he operated as an outside business activity while acting as an agent of Convergent.
In October 2014, Convergent was rocked by the 44-year-old Mr. Zier's death and a regulatory investigation revolving around a private fund, ZAM LLC, he had been running for years.
From 2007 to 2014, Mr. Zier, in connection with his operation of ZAM, solicited certain clients of Convergent, among other individuals, for investment in ZAM, according to the CFTC. Mr. Zier made false representations as to ZAM's performance, the CFTC said. Those included representing that ZAM was profitable when, in reality, it suffered substantial losses, and fabricating false performance data Mr. Zier provided to existing investors to conceal ZAM's losses.
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In 2014, Convergent compliance personnel discovered that certain of ZAM's account statements and performance reports were inconsistent, according to the CFTC. From December 2010 till Mr. Zier's death, fraudulent solicitations in the commodity pool totaled $2.9 million, according to the CFTC.
Previously owned by City National Bank, Convergent was sold to Pathstone Federal Street earlier this year. As of its most recent form ADV, Convergent had $133.7 million in assets and four accounts.
Calls to Convergent and Pathstone were not returned.
