Stockbrokers and financial advisors occupy a place of trust. And, in most cases, a client’s trust in their financial advisor is well-placed. However, perhaps more often than most people realize, stockbrokers and financial advisors engage in illegal conduct specifically intended to enrich themselves at their clients’ expense.
This is exactly what is alleged to have occurred at UBS Wealth Management USA. According to a recent report, one of the firm’s former brokers in Waco, Texas, stole more than $17 million from customers over a period of more than 25 years. Evidently, the broker was able to “fraudulently convince” more than 20 clients to invest in a “sham” investment that he and a friend from college created. To induce clients to make this investment—which was not included among UBS’s offered products—the broker promised them between 4% and 8% interest, which would compound quarterly. And to keep the fraud going, he and his partner would send out fake account statements purporting to show that the accounts were increasing in value, as promised.
However, in September 2021, the fraudulent investment scheme started to unravel. At this point, The broker left UBS and began working for another investment firm. There are allegations that he continued to push the same fraudulent investment at his new firm.
Once the broker’s scam came to light, UBS paid $5.7 million to three clients who lost money in the broker’s scam. The company reports that it continues to reimburse other similarly situated clients. More recently, UBS filed a lawsuit against the broker in an attempt to secure compensation for the funds that it has paid—and will need to pay—aggrieved investors. There was a hearing scheduled for earlier this month in which UBS asked the court to seize the broker’s assets, as well as his wife’s, pending resolution of the case.
However, subsequently, the broker submitted an emergency bankruptcy filing, which paused UBS’s case against him. Typically, a pending bankruptcy lawsuit places a “stay” on all other pending lawsuits against the filer. Not surprisingly, this is a relatively common strategy used to delay proceedings. Filing for bankruptcy also removes any state court proceedings to federal court, which can complicate matters for any parties to the original case.
Have You Been Duped by an Investment Broker or Financial Advisor?
If you recently learned that you were the victim of broker fraud, reach out to the Forman Law Firm, P.C. At the Forman Law Firm, we represent aggrieved investors who lost money due to no fault of their own, helping them recover their assets and hold those responsible for their losses accountable. Attorney Bryan Forman has extensive experience handling complex fraud and misrepresentation claims and can provide you with the information you need to make the best decision on how to proceed with your case. To learn more, and to schedule a free consultation, reach out to the Forman Law Firm, P.C. at 512-306-8188 today. You can also reach us through our online contact form.