FINRA banned a Virginia financial advisor to NFL and NBA players after he failed to show up for a disciplinary hearing for a firm he worked for, which was accused of defrauding pro athletes and other clients out of $18 million.
Meanwhile, the SEC went after an inside trader at a hedge fund and charged two Tampa-based advisors with fraud.
FINRA Ejects Advisor to Pro Athletes for Skipping Fraud Hearing
FINRA has banned a former financial advisor who handled investments for the likes of Brandon Knight, a Detroit Pistons guard, and Joe Haden, a cornerback for the Cleveland Browns, after he failed to show up for a disciplinary hearing regarding charges of fraud against Success Trade Securities, a firm he was working with.
Jinesh "Hodge" Brahmbhatt of Virginia-based Jade Private Wealth Management, who formerly advised players in the NBA and NFL, had sold Success Trade's promissory notes to the players and former players — some 58 people altogether, including non-sports figures — who had been promised returns ranging from 11% to 26%.
The former advisor, who was registered with the NFL Players Association's financial advisor program, advised his clients in late April that he was not sure whether they'd be able to reclaim their principal. In May the players' union suspended Brahmbhatt's registration and notified players' agents of the action.
The players' money was going to finance the personal expenses of Success Trade CEO Fuad Ahmed and to make principal payments to earlier investors in the scheme, which operated in Ponzi fashion. Ahmed used nearly $800,000 in investor money to pay the lease on a Range Rover and make payments on credit cards, buy clothing and make interest-free loans to his brother.
Brahmbhatt, whose firm used to manage money for more than 70 different professional athletes, was supposed to show up to testify at an August disciplinary hearing called by FINRA to investigate the Success Trade situation. He never showed, and instead on Nov. 4 signed a letter of acceptance, waiver and consent.
SEC Charges Another Tipper in Galleon Insider Trading Scheme
The Securities and Exchange Commission charged a former employee at a Silicon Valley-based semiconductor company for his role tipping nonpublic information used in connection with Raj Rajaratnam's massive insider trading scheme.
The SEC alleges that Sam Miri, who worked in the communications division at Marvell Technology Group, tipped off former Galleon Management portfolio manager Ali Far. He used the nonpublic information provided by Miri to trade Marvell securities on behalf of hedge funds that he founded after leaving Galleon. Far and Spherix Capital, who were among those earlier charged by the SEC in the Galleon matter, earned hundreds of thousands of dollars in illicit profits based on Miri's tips. In exchange for the illegal tips, Far arranged four quarterly payments to Miri totaling approximately $10,000.
Miri, who lives in Palo Alto, Calif., has agreed to settle the SEC's charges by paying more than $60,000 and being barred from serving as an officer or director of a public company.
"Miri finds himself playing the role of defendant because he chose to violate his duty to protect his employer's confidential information by selling it to a hedge fund manager in exchange for quarterly payments," said Sanjay Wadhwa, senior associate director for enforcement in the SEC's New York Regional Office, in a statement. "A total of 35 firms and individuals have now been held accountable for their varying roles in the Galleon scheme."
Miri agreed to pay $10,000 in disgorgement, $1,842.90 in prejudgment interest and a $50,000 penalty. Miri also agreed to be barred from serving as an officer or director of a public company for five years. Without admitting or denying the charges, Miri agreed to be permanently enjoined from future violations of these provisions of the federal securities laws. The settlement is subject to court approval.
SEC Charges Hedgie With Insider Trading on Tips on Baby-Clothes Giant
