SEC enforcement officials said Gregory J. Adams and Larry C. Grossman, both of Sovereign International Asset Management, put most of their clients' money into funds controlled by an asset manager who paid them $4.3 million in commissions. They failed to disclose the conflict of interest, the SEC said.
The Securities and Exchange Commission on Wednesday announced fraud charges against two Florida financial advisers for selling “risky” investments without disclosing the commissions they earned for doing so.
SEC enforcement officials said Gregory J. Adams and Larry C. Grossman, both of Sovereign International Asset Management, put most of their clients' money into funds controlled by an asset manager who paid them $4.3 million in commissions. They failed to disclose the conflict of interest, according to Eric I. Bustillo, director of the SEC's Miami regional office.
In a statement, the SEC said the funds were “risky, lacked diversification, and lacked independent administrators and auditors,” which they said the advisers ignored and failed to disclose.
The charges, which will be taken up in an SEC administrative proceeding, also accused the Clearwater-based advisers of violating custody rules that require certain procedures when handling clients' money. The asset manager has been charged separately.
The fraud occurred between 2003 and 2008, the SEC said. Sovereign reported managing $85 million for clients in 2008.
Lawyers for Mr. Adams and Mr. Grossman did not immediately respond to a request for comment late Wednesday.
