A court-appointed receiver in a Utah Ponzi case has sued Penson Financial Services Inc., claiming that the firm was complicitous in perpetuating the scheme for a clearing client.
The receiver, Wayne Klein, founder of Klein & Associates PLLC, alleges in a suit filed in a Utah state court Dec. 10 that Penson ignored its own procedures in allowing Ascendus Capital Management LLC to steal client assets by using forged letters of authorization.
Mr. Klein represents the estate of Ascendus, whose manager, Roger Taylor, and an associate, Richard Smith, allegedly ran the scheme from early 2003 to January 2006.
Both men have been charged criminally in the case.
In an interview, Mr. Klein said about $4 million allegedly was stolen from investors.
“We do not sue Penson lightly,” Mr. Klein said. “But the documents we've found demonstrate actions that were clearly in the realm of things in their control that they should not have been doing.”
Signatures were copied onto forged documents that were faxed to Penson, the suit claims, even though Penson's policy forbids faxed, non-notarized transfer forms.
As a result of a 2001 settlement with the state of Nevada, Penson requires original, notarized letters of authorization before transferring assets. The lawsuit states that notices to customers about asset transfers failed to note that assets were going to third parties.
Penson, Mr. Klein said, “should not have been making payments on forged wire transfer requests [or] sending payments to investment advisers” from customer accounts.
Penson also knew fees paid to Ascendus were performance-based but that the defrauded investors did not financially qualify for performance-based fees, the lawsuit alleges.
The suit asks for unspecified damages.
“The receiver's core allegations against Penson are false and inaccurate, and his legal claims are not supported by the law,” Tim Davis, an associate general counsel at Penson, said in a statement.
“We look forward to defending ourselves in the appropriate forum,” Mr. Davis wrote.
E-mail Dan Jamieson at djamieson@investmentnews.com.
