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SEC Charges Adviser with “Multiple Breaches of Fiduciary Duty”

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  • Posted on: Oct 24 2016

What type of fraud is Laurence Balter accused of?

Laurence Balter, a former fund adviser and registered investment advisor, stands accused by the Securities and Exchange Commission (“SEC”) of “multiple breaches of fiduciary duty.” Breaches of fiduciary duty occur when financial advisers prioritize their own interests over those of their clients. The SEC accuses Balter, who was operating through Oracle Investment, located in Washington and Hawaii, of collecting more than $500,000 in profitable trades from an omnibus account  (an account between two future brokers), while leaving his clients, many of them elderly, relatively naïve investors, holding the bag. The SEC initiated a cease-and-desist proceeding on the matter.

Allegations of this type are, of course, serious. Often the situation is extremely complicated. Professional experience is always required to unravel the tangle of evidence. If you find yourself or your firm accused of improperly managing a customer’s account, or if you are investor who believes that your account has been mismanaged, you should immediately contact a securities arbitration attorney.

The SEC, which is taking its case against Balter before an internal administrative court, alleges that he “reaped more than a half-million dollars in ill-gotten gains by siphoning winning trades from his clients and withdrawing more than his fair share of management fees,” while misleading his clients about both his investment strategies and his fees. The SEC states that its goal in the matter is to determine appropriate remedial action in terms of appropriate civil penalties and reimbursements to Balter’s former clients.

Not the First Time Balter’s Actions Have Come under Scrutiny

This is not the first time Balter has been accused of fraudulent conduct. According to Financial Industry Regulatory Authority (FINRA) records, Balter has twice before been the subject of customer disputes, one involving excessive fees and the other concerning suitability of investments and charges of an unauthorized sale. The SEC describes three distinct schemes, involving 120 accounts, that Balter is accused of perpetrating between 2011 and 2014 and points out that during the years in question, Oracle Investment Research managed accounts were, at their peak, valued at $47 million.

An Ounce of Prevention

For the advisor, the best way to deal with allegations of misconduct is to prevent them by following the rules of the road. This is one of the reasons it is invaluable to engage the services of an experienced securities attorney to make sure your actions comply with existing (and changing) regulations.

For the customer, the best way to protect your yourself from misconduct is to be vigilant in the review of your account.  This means, among other things, reviewing your monthly statements and asking questions if something looks wrong. After all, it is your hard earned money that may be at risk.

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