Staten Island Adviser Charged with Running an Internet Scam

April 20, 2010

The SEC charged Gryphon Holdings Inc., a Staten Island, New York based investment advisory firm, and its owner Kenneth E. Marsh, as well as several Gryphon associates with operating an Internet-based scam that misled investors into paying fees for phony stock tips and investment advice from fictional trading experts.

The SEC alleged that Gryphon induced investors to pay fees of up to $250,000 for securities recommendations that the company falsely claimed were based on sound research and successful strategies of trading experts with superior knowledge. Gryphon allegedly touted trading experts with fake names who boasted millions of dollars in trading riches as well as top-notch educational backgrounds and prominent experience at major Wall Street firms.  For example, the SEC stated that Gryphon representatives fabricated glowing testimonials from George Soros and purported clients who profited by trading securities the firm recommended.

According to the SEC's complaint, investors who followed the guidance of Gryphon's purported experts suffered significant losses by trading on those tips or, in at least one instance, by allowing Gryphon to trade on their behalf.  The SEC further stated that Gryphon's representatives used high-pressure tactics to obtain additional fees from clients to purportedly give those clients access to "better" yielding investment tips, even if Gryphon had not provided all the advisory services for which the client had already paid.

Gryphon marketed itself as a publisher of financial information.  The SEC stated that Gryphon frequently posted investment tips on the Internet using at least 40 different monikers such as "Wolves of Wall Street," "Wall Street's Most Wanted," "Pure Profit," and "Mafia Trader."  In reality, as alleged in the SEC's complaint, Gryphon's financial publications only served as a vehicle to attract unsuspecting clients to pay fees for personalized investment recommendations, portfolio analysis, and money management services that Gryphon purportedly provided.

Click to access the administrative action.


Enforcement Actions, Investment Advisers