The charges also include an emergency asset freeze.
Pennsylvania-based Peter Kohli allegedly duped 120 investors out of more than $3.2m (£2.4m, between 2012 and 2015 to invest in the DMS Funds, a series four emerging market mutual funds, which later collapsed.
According to the regulator, Kohli also ran two firms – DMS Advisors and parent company Marshad – which acted as investment advisers to the now-defunct funds.
Accused of pocketing investors cash, Kohli often made excuses that Marshad was preparing for an initial public offering. When the funds were nearing collapse, he sold promissory notes that he had no reason to believe could ever be repaid.
Kohli also filed false fund registration documents with the SEC, exaggerating the funds’ sophistication and the DMS Funds’ ability to repay investors, said the regulator.
The former broker, who was a registered rep and investment advisor at Trustmont Financial Group between 2010 to 2015, previously ran into trouble for accidentally disclosing a client’s name and for accepting a loan from a client,, according to website BrokerCheck.
In another case, SEC also brought fraud charges against an investment adviser accused of “cherry-picking” profitable trades for his own account rather than a client’s accounts, and misleading seniors and other clients about the fees he charged and the risks in investments he recommended.
Laurence Balter and his Hawaii-based firm Oracle Investment Research purchased equities and options in an omnibus account and waited to allocate the trades until after they were executed and Balter knew whether they were profitable, said the SEC.
Accused of breaching his fidiuciary duty, Balter allegedly allocated profitable trades to his own accounts and unprofitable trades to his client accounts.
Balter falsely told clients invested in his affiliated mutual fund they would not pay both advisory fees and fund management fees, yet he charged both fees anyway.
He also made trades for the mutual fund that ultimately resulted in a “non-diversified portfolio that caused significant losses to investors”.
“We allege that Balter reaped more than a half-million dollars in ill-gotten gains by siphoning winning trades from his clients and withdrawing more than his fair share of management fees,” said Jina Choi, director of the SEC’s San Francisco regional office.
“Investment advisers breach their fiduciary duty when they favor their own interests and force clients to take less profitable trades without their knowledge.”