Litigation: SEC charges Wisconsin adviser with defrauding senior clients

According to the SEC's complaint, Liddle, while acting as an investment adviser, fabricated documents and made misrepresentations to clients, many of whom were seniors. As alleged, Liddle misrepresented that these clients' portfolios had become too risky and needed to be replaced with less risky securities. However, these "less risky" securities were often rated as high risk and were also unavailable.

The complaint alleges that Liddle had advisory clients send money directly to his investment advisory company, where Liddle misappropriated client funds and never invested the money on his clients' behalf. The complaint alleges that Liddle then fabricated statements and made purported investment payments that were in fact coming from defrauded client funds, to advisory clients in order to continue his fraudulent scheme.

The SEC's complaint, filed in federal court in the Western District of Wisconsin, charges Liddle with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The SEC seeks injunctive relief, disgorgement with prejudgment interest, a civil penalty, and a bar against Liddle serving as an officer or director of a public company.

The SEC's investigation, which is ongoing, was conducted by Matthew T. Wissa, Scott J. Hlavacek, and Angela D. Dodd, and supervised by Amy S. Cotter of the Chicago Regional Office. The litigation will be handled by Ms. Cotter and Mr. Wissa.

The SEC appreciates the assistance of the Wisconsin Department of Financial Institutions - Division of Securities, the Wisconsin Office of the Commissioner of Insurance, and the Financial Industry Regulatory Authority.

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Original text here: https://www.sec.gov/litigation/litreleases/2023/lr25622.htm