The SEC has charged Darryl Matthew Cohen, a former investment advisor at “a large financial institution”, with misappropriating more than $1 million from three current and former NBA players over a period of two and a half years.
The SEC’s press release, for an unexplained reason, did not identify the brokerage firm and one has to wonder why the SEC went out of its way not to do so.
Misuse of Client Funds for Personal Expenses
According to the SEC’s complaint, Cohen used client funds, without their understanding or authorization, for personal expenditures. He reportedly used the funds to support his son’s amateur basketball program, for a home gym, and to pay back another client whose funds Cohen had misappropriated. Moreover, Cohen allegedly sold life insurance settlements to the clients for kickbacks to fund his home improvements.
Violation of Federal Securities Laws
The SEC’s complaint, filed in US District Court for the Southern District of New York, charges Cohen with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctive relief, disgorgement and prejudgment interest, and a civil penalty.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against Cohen. The SEC cannot bring criminal charges on its own.
Protecting Investors from Fraud
“Instead of protecting his clients’ investments, Cohen took advantage of their trust for his personal gain,” said Andrew Dean, Co-Chief of the Asset Management Unit. “Protecting investors from fraud by their financial advisers is a priority for the SEC.” This statement shows that the authorities are committed to protecting the interests of investors and preventing any fraudulent activities that could harm them.
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