Los Angeles Investment Adviser Charged With Securities Fraud

Los Angeles Investment Adviser Charged With Securities Fraud

Marc Broidy, the founder, Principal, and Chief Executive Officer of Broidy Wealth Advisors, LLC, was arrested earlier today on charges of securities fraud.  Broidy allegedly schemed to defraud his clients by withdrawing over $640,000 in excess management fees and then misappropriating more than $865,000 worth of stock held in trusts, over which he was trustee, to conceal his fraudulent overbilling scheme.

According to the complaint unsealed on Thursday, October 27, from approximately November 2010 to July 2016, Broidy had discretionary authority to buy and sell securities in brokerage accounts he set up for his clients and was permitted to deduct management fees from those accounts as compensation.  For three of his clients, instead of deducting the amounts he was permitted to bill, Broidy took more than $640,000 in excess fees.  To hide his theft, Broidy falsified many of those clients’ Internal Revenue Service Form 1099s so that the forms reflected far less in management fees than Broidy actually took.

One client discovered the theft and forced Broidy to repay the stolen fees in a settlement.  To pay the settlement and other personal expenses, such as credit card bills and house and car payments, Broidy sold more than $865,000 worth of stock held in trust accounts that another client had established for his children, and for which he had appointed Broidy trustee.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Broidy faces a maximum sentence of 20 years in prison.