In a shocking turn of events, the U.S. Securities and Exchange Commission (SEC) has unveiled charges against Arete Wealth Management LLC, Arete Wealth Advisors LLC, and several key individuals in connection with an illegal securities offering. This case exposes a web of fraud, registration violations, and compliance failures that have rocked the financial industry.
The Players
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At the center of this scandal are:
- Joey Miller
- Jeff Larson
- Randy Larson
- UnBo (Bob) Chung
These former representatives of Arete Wealth Management and Arete Wealth Advisors now face serious allegations that could reshape their careers and the industry at large.
The Scheme
The charges stem from a brazen “selling away” scheme involving Zona Energy Inc., a sham oil-and-gas company. From October 2018 to May 2020, Miller, Jeff Larson, and Randy Larson allegedly sold over $8 million worth of unauthorized Zona shares to their Arete clients.
To cover their tracks, they used personal phones and emails, dodging company surveillance. Miller and Jeff Larson went a step further, making false statements to potential Zona investors. Their reward? Deeply discounted Zona shares from the scheme’s mastermind, Richard Dale Sterritt, Jr.
The Cover-Up
When the truth came to light, Chung and Arete management scrambled to contain the damage. They ordered the accused to obtain settlement agreements from affected clients. These agreements, signed by over 100 clients, contained misleading statements and an illegal liability disclaimer.
The Charges
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, outlines a laundry list of violations:
- Antifraud provisions of the Investment Advisers Act
- Recordkeeping provisions of the Securities Exchange Act
- Registration violations
- Aiding and abetting various violations
The Consequences
The SEC is pulling no punches. They’re seeking:
- Permanent injunctions
- Civil penalties
- Conduct-based injunctions
- Penny stock bars
- Officer and director bars
A Wider Net
The investigation has also ensnared Michael Sealy, charged with acting as an unregistered broker-dealer in selling Zona shares. Sealy has agreed to pay a $200,000 civil penalty and face a 12-month suspension from penny stock offerings.
As this case unfolds, it serves as a stark reminder of the importance of regulatory compliance and ethical conduct in the financial industry. The SEC’s swift action demonstrates its commitment to protecting investors and maintaining the integrity of the markets.
