SEC Orders Sanctions Against New York Investment Adviser for Allegedly Misusing Client Funds

The Securities and Exchange Commission (SEC) has taken significant action against Bruderman Asset Management, now known as Gary Goldberg Planning Services, LLC (BAM), and its founder, Matthew J. Bruderman. The SEC has instituted public administrative and cease-and-desist proceedings against these entities, with a final Order found here, citing violations of the Investment Advisers Act of 1940. The proceedings revolve around the alleged misuse of client funds by BAM, which raised over $6.1 million from investment advisory clients and directed these funds towards entities with ties to Bruderman. The SEC alleges that these actions violated various sections of the Advisers Act, including Sections 206(2) and 206(4), and Rule 206(4)-7.

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.