Flagstaff broker Dharmesh Vora receives 3-year ban by SEC for investment violations

Following a 13-month investigation by the Securities and Exchange Commission (SEC), Flagstaff broker Dharmesh Vora received a three-year ban from the practice due to investing client assets into high-risk structured notes and doing so without adequate disclosures.

The investigation, which began on Aug. 9, 2023, reached its conclusion on Sept. 16 after a total of 15 customer disputes were filed between May 23, 2022, and March 20, 2024, according to the U.S. government's investment advisor disclosure. According to the filing found on the SEC's website, Vora breached his fiduciary duty and committed compliance failures by investing the majority of his advisory client's assets into structured notes without adequate disclosures.

In addition to being barred from serving as or having any association with a broker, dealer, investment advisor and similar practices for three years, Vora and Vora Wealth Management were ordered to pay a disgorgement of $1,114,079 and a prejudgement interest of $231,118 to the SEC.

Vora individually is also required to pay a civil penalty of $300,000 to the SEC.

Following the three-year ban, Vora will be allowed the right to apply for a return to the line of work to a self-regulatory organization or the SEC.

At the time of the ban, Vora was listed by the SEC as the "founder, 100% owner, principal investment professional, President, and Chief Compliance Officer" of Vora Wealth Management.

Notably, the SEC's investigation uncovered Vora and Vora Wealth receiving undisclosed benefits from one of the brokers where the structured notes were purchased that were not disclosed as a possible conflict of interest to the clients. A wine tasting and payments to subsidize a client event totaling approximately $32,972 were included as the undisclosed benefits, which the SEC described as creating "a potential incentive for an adviser to use a broker to purchase investments for its clients."

Within the lengthy facts section of the investigation's final report, the SEC explained that the investment into the notes "was also inconsistent with the investment strategy Vora Wealth disclosed to clients." The SEC added that Vora and Vora Wealth used more than $100 million of clients' funds to purchase the notes, "yet structured products are not listed as an investment category."

As a part of Vora himself minimizing the potential risks to the investments, the SEC said he also failed to provide clients with any materials about the notes and for those who did receive information, it was provided "only after Vora had already made the investment on the clients' behalf." The investments into the notes were done so "regardless of a client's stated investment objectives or risk tolerance," the SEC's findings said, with Vora knowing about 75% of Vora Wealth's clients to be "retirees and relied on income generated from their investment portfolios for living expenses."

Multiple affected clients declined to speak to the Arizona Daily Sun due to potential litigation.

While conducting the investments for multiple retiree accounts, Vora was hosting the "Retirement Roadmap Radio Show" on 97.1 FM The Big Talker from February 2021 to August 2021, with the videos still available on YouTube.

Vora, who had consistently been a title sponsor of Flagstaff's Holiday Lights Parade in recent years, moved his office's location from North Humphreys Street to South Woodlands Village Boulevard effective Feb. 1.

The location's phone number now connects to Specter Wealth, which lists its main office location in Scottsdale, with its services offered through Ultra Financial Partners.

Vora Wealth's website began redirecting to Specter Wealth sometime between mid-May and mid-June.

Beginning Nov. 6, 2020, through Nov. 4, 2021, Vora and Vora Wealth used their authority over client accounts to purchase the structured notes -- which the SEC deemed inappropriate for most of the client base due to their desire to safety and income goals, their net worth, their retirement status and sophistication with the investments. The notes were tied to four Nasdaq stocks, with 738 of Vora Wealth's 872 accounts investing approximately $124 million into the structured notes.

The total affected accounts accounted for 84.6% of Vora Wealth's clients and 88.8% of the assets under the firm's management.

The SEC's investment advisor public disclosure shows the initial customer dispute from May 23, 2022, requested $165,000 in damages, but was closed with no action due to the customer becoming a party in a separate dispute. Three others were listed as settled and the remaining 11 listed as pending. The three settled cases, filed between June 9, 2022, and Oct. 31, 2022, combined for a settlement amount of $488,500 after the damages were requested at a total of $1.475 million.

The settlements dwindled in total, with the first settlement at $210,000 followed by $175,000 for the Sept. 2, 2022, dispute and $103,500 for the Oct. 31, 2022, dispute. The 11 pending cases remaining have $8,001,368 in combined damages requested, individually ranging from $5,000 to $3,385,000

All 15 disputes included a nearly identical statement by Vora, denying any wrongdoing and saying he believed the investments were "in line with the suitability and risk assessment" for each customer. In Vora's most recent Form ADV submitted on April 4, 2024, the assets under management were reported to be approximately $74.8 million for 1,065 accounts for approximately 660 clients. The same account and client totals were reported in October 2021, with $139.5 million in assets under management.

According to the SEC, most of the structured notes had reached maturity by July 2024 and "Vora Wealth's clients' accounts have a collective realized loss of their principal of over $89 million."