SEC Charges California-Based Investment Adviser for Operating a Fraudulent Scheme

April 15, 2010

The SEC charged Richard H. Nickles of Dana Point, California, and his three companies, Innovative Advisory Services, Inc., Innovative Advisory Services LLC, and Island Trader LLC, all of which operate from Santa Ana, California, with engaging in a fraudulent advisory scheme.  The SEC alleged that since March 2009, Nickles had raised approximately $3 million through advertisements in prominent newspapers for investments that were purportedly insured or U.S. Government guaranteed. In reality, the SEC stated that Nickles did not invest the funds as promised.

The SEC alleged that Nickles provided investors with false trade confirmations that identified securities he had not purchased or that were non-existent. In an effort to portray his business as legitimate, Nickles, according to the SEC, issued the confirmations through Island Trader, a regulated broker-dealer which had no dealings with Nickles or Innovative Advisory since March 2009. According to the SEC, through these confirmations, Nickles succeeded in giving investors the false impression that he was associated with a legitimate broker-dealer and that their investments were insured with the Securities Investor Protection Corp. He allegedly used the name Island Trader LLC for his non-regulated company in order to give further credence to his misrepresentations. The SEC also alleged that Nickles held himself out as a certified financial planner, when, in fact, he was not.

Click to access the administrative order.


Enforcement Actions, Investment Advisers