The SEC said in a release Wednesday that it took emergency action to charge Nashville, Tennessee-based investment adviser Gordon Grigg and his firm ProTrust Management, Inc., with securities fraud. The agency obtained a court order freezing the firm’s assets.
Grigg allegedly defrauded clients out of at least $6.5 million and misrepresented that their money was invested in TARP and other securities that do not exist, according to the SEC. Grigg and his firm are not registered with the SEC or a state regulator.
Grigg obtained control over funds of at least 27 clients since 2007, creating fraudulent account statements reflecting his clients’ ownership of these non-existent securities, according to the SEC. He also falsely claimed partnerships with some of the nation’s best investment firms.
In December, he told clients that ProTrust had the ability to invest client funds in government-guaranteed commercial paper and bank debt as part of the TARP program.
“As alleged in our complaint, Grigg and ProTrust preyed upon investors’ desire for safety by claiming associations with reputable investment firms and the government’s TARP program,” said Katherine Addleman, regional director of the SEC’s Atlanta Regional Office, in a statement. “Investors should carefully check any purported affiliations. In this case, not only were such claims false, but there is in fact no program in which investors can buy debt guaranteed by the TARP program.”
Grigg joins a list of advisers whose fraudulent activity has been unearthed lately (see “Mass. Broker Allegedly Scammed Investors out of $2M’).