Adviser Settles SEC Charges for Failing to Register and Misrepresentation
Commentary by Steven Lofchie
A baggage handler for an airline company settled SEC charges for failing to register as an investment adviser with the SEC and making material misrepresentations to clients concerning the value of assets under his management.
According to the SEC, the baggage handler, Marcos Tomaya, provided investment advisory services between 2003 and 2017 for his colleagues, charging an annual fee of $300 to access their airline retirement accounts online and select investments on their behalf. The SEC found that the airline employee made material misrepresentations on social media by claiming to have nearly one million dollars in his own retirement account. According to the SEC, when the State of Nevada ordered the baggage handler to suspend his unregistered business, he had more than 900 clients with accounts worth more than $172 million.
To settle the charges, Mr. Tomaya agreed to (i) cease and desist from further violating SEC rules, (ii) a censure, (iii) a suspension from associating with any investment adviser for a 12-month period or serving on an advisory board for any registered investment company, and (iv) pay a disgorgement of $144,485 with prejudgment interest of $9,803, and a civil monetary penalty of $50,000.
Commentary
Whether the baggage handler lost money on behalf of his clients was not noted in the enforcement release. Perhaps he made money on behalf of his clients. Perhaps he beat the market. The SEC's Order does not suggest that he stole from his clients. There might be a movie in this.