Investment Adviser Representative Pays Restitution After Soliciting Elderly Client for Personal Loan

JEFFERSON CITY, Mo., Sept. 14 -- Missouri Secretary of State Jay R. Ashcroft issued the following news release:

Secretary of State Jay Ashcroft's Securities Division issued a Consent Order with a registered investment adviser representative who solicited an elderly client for a personal loan. The order states Thomas K. Elder of Trustmont Advisory Group, Inc. also failed to timely amend the Uniform Application for Securities Industry Registration or Transfer Form to disclose tax liens.

The division began an investigation in January after receiving notification from Trustmont that Elder was fired for failing to report tax liens in a timely manner. Elder was also fired for violations of "fiduciary duty and conflict of interest rules" related to a $7,500 loan he received from a 79-year-old Lee's Summit client in 2010. Elder issued the client a promissory note with an annual interest rate of 8 percent and agreed to pay back the entire amount before October 2011.

Instead of making cash payments to the client, Elder discounted the client's advisory fees and failed to repay the loan. He says he used the funds "to help achieve some financial stability for both personal and business related expenses."

"Investment advisers have a fiduciary duty to their clients to act and provide investment advice in their client's best interests," Securities Commissioner David M. Minnick said. "If an investment adviser seeks a loan from a client, they are only seeking to benefit themselves."

Elder consented to findings by the commissioner and agreed to pay restitution in the amount of $10,000, a payment to the Investor Education and Protection Fund and investigation costs totaling $1,500. Elder was also censured.

Ashcroft urges all investors to know the risks. If you have any questions about an investment opportunity or wish to check the background and registration status of a financial adviser or firm, please call the toll-free investor protection hotline at 800-721-7996, or go online to www.sos.mo.gov/securities to file a complaint.