Former RIA Enjoined from Further Violations

The order of preliminary injunction was made in connection with allegations that the registered representative misappropriated investor funds. (See “Atlanta RIA Allegedly Stole $2M from Investors.”) 

Richards is enjoined from further violations of the antifraud provisions of the federal securities laws, as well as sections of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. 

The order continued the freeze of Richards’ assets put in place by court order in May, prevented any destruction of documents, and ordered an accounting and expedited discovery. The Securities and Exchange Commission (SEC) also seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. Those claims will be adjudicated at a later date. Richards consented to the entry of the order of preliminary injunction, without admitting or denying the SEC’s charges. 

According to the SEC’s complaint, since at least 2008, Richards, a registered representative of the broker/dealer LPL, misappropriated approximately $2 million from at least seven investors. The majority of these funds constituted retirement savings and/or life insurance proceeds from deceased spouses. 

The SEC also alleged that Richards instructed investors to write out checks to entities under his control with the understanding that Richards would invest their funds in fixed-income assets, variable annuities and/or common stock, but that none of these investments was made. The investments did not appear on client brokerage account statements, and Richards received no commission income from these investments. The complaint alleged that Richards took funds entrusted to him and siphoned them for personal use. 

The SEC’s release is here.