SEC Bars Wells Fargo Advisors Broker For Fraud
Aaron Robert Parthemer of Fort Lauderdale, Florida has been fined $160,000.00 and barred from being a broker or investment adviser or otherwise associating with any brokers or investment advisories according to an Order Making Findings and Imposing Sanctions Pursuant To Securities Exchange Act of 1934 Section 15(b), Investment Advisers Act of 1940 Section 203(f) and Investment Company Act of 1940 Section 9(b). Administrative Proceeding File No. 3-17878 (Aug. 23, 2017).
According to the Order, while Parthemer was associated with Wells Fargo Advisors, LLC and Morgan Stanley Smith Barney, Parthemer took part in the sales of at least $5,000,000.00 worth of illiquid and unregistered securities. The Order stated that the securities transactions concerned Global Village Concerns Inc. – an internet branding company. Apparently, a number of investment advisory customers and professional athlete brokerage customers invested in the company. The Order stated that GVC stock options and warrants had been provided to Parthemer by GVC in return for Parthemer’s efforts.
Evidently, Parthemer engaged in the activities pertaining to GVC securities outside the auspices of the broker-dealers that he worked for including Morgan Stanley and Wells Fargo Advisors. Apparently, omissions and misrepresentations about those GVC investments had been made by Parthemer to customers of the investment advisory specifically concerning GVC.
For example, Parthemer steered one of his investment advisory customers towards investing in GVC by Parthemer’s claim that the investment would provide the customer with seven figure returns. The Order stated that Parthemer then specified that the customer was expected to earn twenty percent on the investments. Subsequently, while at Wells Fargo Advisors, Parthemer reportedly claimed that the customer’s $200,000.00 invested in GVC was worth $500,000.00. He then claimed to the customer in a subsequent portfolio review that the investment was worth $2,000,000.00. Evidently, Parthemer had no adequate basis to specify either the GVC investment valuations or the expected returns at the time that representations concerning those figures were made to the customer.
Apparently, the advisory customers had been presented the information by Parthemer before Parthemer ever conducted any due diligence on those investments to ensure the information’s veracity. Moreover, Parthemer reportedly used unauthorized communication mediums when dealing with customers of Wells Fargo and Morgan Stanley. Correspondence of that nature was evidently withheld from the firms’ attention, so it was not preserved in the firms’ records or books.
SEC found that Parthemer engaged in fraudulent activities; conduct violative of Investment Advisers Act Sections 206(1) and 206(2). Moreover, SEC stated that Parthemer’s recommendations and sales of securities without being registered was violative of Securities Exchange Act of 1934 Section 15(a). Finally, by Parthemer failing to preserve important information regarding securities transactions, SEC found Parthemer to have caused Morgan Stanley’s and Wells Fargo’s violations of Securities Exchange Act of 1934 Section 17(a)(1) and Rule 17-a-4(b)(4).
This is not the first time that Parthemer has been barred by a securities regulator for misconduct. Particularly, Parthemer has also been barred by Financial Industry Regulatory Authority (FINRA) in all capacities supported by allegations that while Parthemer was associated with Wells Fargo and Morgan Stanley, Parthemer engaged in outside business activities without disclosing them to the firm; engaged in unapproved customer lending arrangements; sold away from the firms; and falsified documentation and information to those firms as well as FINRA when his activities were being investigated. Letter of Acceptance Waiver and Consent No. 2011030405801 (Apr. 22, 2015). FINRA found Parthemer’s conduct violative of FINRA Rules 2010, 8210, 3240, and 3270 as well as NASD Rules 3030 and 3040.
Additionally, FINRA Public Disclosure reveals that Parthemer has been identified in eleven customer initiated investment related disputes containing accusations of Parthemer’s misconduct; five alone since Parthemer was barred by SEC. Specifically, a customer initiated investment related arbitration claim concerning Parthemer’s activities was settled for $50,000.00 in damages founded on allegations that between 2009 and 2017, Parthemer effected transactions in the customer’s account that were not suitable for the customer. FINRA Arbitration No. 17-00823 (June 30, 2017).
Subsequently, a customer filed an investment related arbitration claim regarding Parthemer’s activities in which the customer requested unspecified compensatory damages based upon accusations that misrepresentations had been made to the customer, among other things, with regard to transactions executed between 2007 and 2017. FINRA Arbitration No. 18-00220 (Feb. 6, 2018).
Thereafter, a customer filed an investment related arbitration claim involving Parthemer’s conduct where the customer sought $180,000.00 in damages supported by allegations that Parthemer steered the customer to invest in private securities transactions that were not approved by Morgan Stanley. FINRA Arbitration No. 18-02683 (July 27, 2018). Further, a customer filed an investment related arbitration claim concerning Parthemer’s activities in which the customer requested $413,000.00 in damages founded on accusations of Parthemer selling away from Morgan Stanley. FINRA Arbitration No. 18-02701 (July 30, 2018).
Parthemer’s registration with Wells Fargo Advisors was terminated on May 15, 2015.