Smith worked in the securities industry as a registered representative of several brokerage firms from 1982 until 2017, including with Bolton Global Capital from May 2007 to February 2017. Smith allegedly sold unregistered securities in a purported hedge fund known as The Haverford Group to more than a dozen investors.
Bolton Global Capital, Smith’s employer, reportedly notified Smith’s customers in early 2017 that their accounts were being transferred to another “financial representative” but reportedly gave no indication that Smith had been terminated and accused of wrongdoing in connection with The Haverford Group.
The SEC Complaint alleges that Smith raised approximately $2.35 million for The Haverford Group from approximately 30 unwitting investors, including some of his Bolton Global Capital customers. Smith allegedly told investors that the purported hedge fund would invest in publicly-traded securities. However, in reality, the purported hedge fund allegedly was in the nature of a Ponzi scheme, with the proceeds of new investments being used to repay earlier investors and for Smith’s own personal use. Smith reportedly attracted elderly and unsophisticated investors to his purported fund, including some members of his own country club.
Smith allegedly created account statements that were not authentic to send to customers, and wrote at least $247,400 worth of checks to himself from Haverford’s checking account, which he deposited into his personal bank accounts and used for personal expenses.
Bolton Global Capital has reportedly denied responsibility for Smith’s actions in response to a customer claim, and indicated that his activities were unauthorized. However, Financial Industry Regulatory Authority rules have established that firms must properly supervise brokers’ activities while they are registered with the firm. If they fail to do so, the firms can be held responsible for the activities of their representatives and, thus, could be ordered to compensate their clients for losses sustained for the period they were registered with the firm.
Investors who lost money as a result of recommendations to purchase purported securities of the Haverford Group may be able to recover investment losses in FINRA arbitration or through litigation if they were customers of Bolton Global Capital. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.