SEC Brings Enforcement Action Against Adviser In Connection with Client Investments in Wrap Program

September 4, 2012

The SEC Instituted an administrative proceedings against Jason A. D’Amato, the former President and Senior Investment Officer of Stanford Capital Management, LLC (SCM), an investment adviser registered with the SEC from September 2006 through September 2009, for misrepresenting to investors and prospective investors the performance of a proprietary mutual fund wrap product known as Stanford Allocation Strategies (SAS).


D’Amato, the portfolio manager for the SAS program, created and used personalized proposals in one-on-one presentations to prospective clients (Pitchbooks) that contained charts showing the annual performance of SAS strategies dating back to 2000.  Pitchbooks created after May 2007, however, were materially misleading because they combined – under the heading “historical performance” – hypothetical, backtested data for 2000 to 2004 with audited, composite data for 2005 to 2008, without an appropriate explanation of the differences in the way the data was calculated and presented.  D’Amato failed to disclose these facts to clients, prospective clients, and Stanford Group Company (SGC) financial advisers (FAs).  Additionally, from at least February 2005 through the Fall of 2008, D’Amato actively misrepresented his credentials to clients, prospective clients, and SGC FAs, holding himself out as a Chartered Financial Analyst (CFA) when, in fact, he had never been a CFA charterholder.  To perpetuate this lie, D’Amato, according to the SEC, fabricated an e-mail, purporting to be sent by the CFA Institute, that congratulated him on passing the Level III CFA exam and achieving CFA charterholder status.  Thereafter, D’Amato used the CFA acronym next to his name on his business cards, in his e-mail signature block, and in copies of his biography that were passed along to clients, prospective clients, and SGC FAs.  Based on D’Amato’s misrepresentations about his qualifications, SCM and SGC also actively promoted D’Amato as a CFA charterholder.

Click here to access the administrative action.


Categories

Enforcement Actions, Investment Advisers