SEC Charges Twin Brothers for Fraudulently Misappropriating $5 Million from Investment Advisory Clients

Litigation release No. 25656 / 3 March 2023

Adam S. Kaplan and Daniel E. Kaplan v. Securities and Exchange Commission, No. The case number is 2:23 cv 01648 (E.D.N.Y. filed March 3, 2023)

The Securities and Exchange Commission (SEC) has filed charges for Adam Kaplan and Daniel Kaplan. They are accused of defrauding clients of their investment advisory services out of $5 million. The SEC claims that the brothers were involved with an SEC registered investment adviser and engaged in various frauds to misappropriate money from 60 clients.

Selon the complaint, defendants charged clients more for their advisory fees after inflating amounts in client agreements without the clients’ knowledge or consent. The defendants were then able to collect more fees than their clients had agreed to. The brothers are also accused of fraudulently charging clients’ credit cards and bank accounts with bogus charges for supposed investments or extra advisory fees that they did not have the right to. They used these funds for their own benefit as well as to reimburse clients who complained about the unusual activity in their accounts. In the complaint, it is also stated that defendants falsified documentation and made Ponzi payments to hide their fraudulent activities.

The SEC filed a complaint in the United States District Court of the Eastern District of New York accusing Adam and Daniel of violations of antifraud provisions of the securities laws and seeking injunctions and disgorgement of prejudgment interests, as well as civil penalties.

Marlene Key Patterson and Nick Magina are currently conducting the SEC investigation of this matter under the supervision Steven Klawans at the Chicago Regional Office. Ariella Guardi, BeLindd Mathie and other attorneys are leading the litigation.

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SEC: What You Need to Know

Securities and Exchange Commission, or SEC, is an American government agency that regulates and oversees the securities market, including stock exchanges and brokerages. Its main mission is to protect and promote investors, ensure fair and efficient markets and facilitate capital formation.

The SEC enforces various federal laws such as Securities Act of 1933, Securities Exchange Act of 1964, and other securities laws to ensure companies provide accurate information to investors. The agency is responsible for requiring companies to disclose pertinent financial and business information. It also monitors the financial market for possible fraud and misconduct.

The SEC plays an important role in the enforcement of securities laws, both by regulating and by investigating and prosecuting those who are involved in fraudulent activity. It can bring civil enforcement action, impose fines and pursue criminal charges for violations.

It also works to educate and inform the public about the rights of investors and the risks they face when investing. The SEC provides investors with resources and guidelines that help them make informed decisions, and to avoid fraud schemes.

Overall, the SEC plays a crucial role in protecting the U.S. Financial Markets by ensuring transparency, equity, and investor protection.

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