The case underscores the importance of regulatory vigilance in the investment industry. Despite assurances of safety and profitability, Woods’s actions demonstrated a flagrant abuse of trust, ultimately causing financial ruin to hundreds of victims across 20 different states.

Investment Advisers are fiduciaries, and as such they owe their customers duties of care and loyalty, both of which were flagrantly breached in this situation. Mr. Woods was a longtime investment adviser representative at Oppenheimer & Co., Inc.

Although Investment Advisory firms and brokerage firms (Broker-Dealers) often claim they are not legally responsible for the unauthorized actions of their advisers, the law of most states holds otherwise. Firms can be legally responsible for the actions of their agents even if the agents acted solely for their own purposes and the firms received no compensation for the wrongful acts. Furthermore federal and state securities laws hold “control persons” liable for agents under their control, and firms further may be liable for breaches of their duties to supervise their agents.

If you believe you were the victim of a ponzi scheme or other fraudulent actions of your investment advisor, please contact securities fraud attorney Scott Greco for a free consultation about your potential case. Greco & Greco has decades of experience representing investors across the country for similar situations.

According to the SEC Order, between February 2017 and August 2021, BAM, under Bruderman’s direction, persuaded at least thirteen investment advisory clients to invest substantial amounts totaling $6.1 million in entities where Bruderman had significant ownership and decision-making authority. Shockingly, these clients were not informed that their investments would temporarily be diverted to cover expenses unrelated to their intended investments or to repay loans made by Bruderman himself.

One particularly concerning example involved a $500,000 equity investment, where $400,000 was transferred to Bruderman’s personal bank account to repay a loan owed by one of the entities. The clients invested based on BAM’s advice, unaware of the temporary diversion of their funds. Despite BAM’s written policies requiring disclosure of material conflicts of interest, these conflicts remained undisclosed, leaving clients in the dark about the use of their investments.

The SEC found BAM and Bruderman in violation of the Advisers Act, specifically Sections 206(2) and 206(4), and Rule 206(4)-7. As part of the settlement, BAM and Bruderman have voluntarily repaid certain debts to investment advisory clients, totaling $1,650,000, and further were required to pay a $250,000 civil penalty.

This SEC order serves as a stern reminder of the regulatory responsibilities that investment advisers bear towards their clients. Misuse of customer funds and failure to disclose conflicts of interest are serious violations that can result in substantial penalties. Greco & Greco’s securities fraud lawyers have decades of experience seeking recovery of customer losses resulting from misconduct and fraud by investment advisory firms. If you believe you may be a victim of similar conduct, please contact Scott Greco for a free attorney consultation about your case.