In addition to fraud in the hedge fund space, investors need to be aware of fraud with strictly investment advisory firms. This notice and the complaint below provide more information on a specific investment advisory firm fraud.
Commission Sanctions Brendan E. Murray for Aiding and Abetting Antifraud Violations and for Conversion
The Commission has found that Brendan E. Murray, formerly a managing director of registered investment advisor Cornerstone Equity Advisers, Inc. (Cornerstone) and secretary to Cornerstone’s advisory clients the Cornerstone Funds, Inc. (Funds), willfully aided and abetted and was a cause of Cornerstone’s violations of antifraud provisions of the Investment Advisers Act of 1940. Cornerstone, a fiduciary to the Funds, misappropriated client funds by knowingly inflating and falsifying vendor invoices, directing the payments of the inflated amounts to an intermediary, and instructing the intermediary to pay the vendors lesser amounts (or nothing) while keeping the overage. The Commission found that Murray participated in the scheme by creating, submitting, and authorizing payment of the inflated invoices. The Commission also found that Murray, who as secretary owed a fiduciary duty to the Funds, converted corporate funds by knowingly submitting inflated invoices for reimbursement. The Commission concluded that it is in the public interest to bar Murray from associating with any investment adviser or investment company, to impose a cease-and-desist order, to impose a civil money penalty in the amount of $60,000, and to order disgorgement in the amount of $21,157 plus prejudgment interest. (Rel. IA-2809; IC-28519; File No. 3-12436)
Please see full complaint: ia-2809 (investment adviosry fraud)