The US Commodity Futures Trading Commission (CFTC) has instigated proceedings and settled charges against Convergent Wealth Advisors, a Maryland-based investment advisory firm. The CFTC Order requires that Convergent pays a $800,000 penalty and is prohibited from further violations the provisions of the Commodity Exchange Act and CFTC Regulations.
The CFTC found that from 2007 to 2014 the late David Zier, in connection with his operation of ZAM, solicited certain clients of Convergent and other individuals for investment in ZAM.
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According to the CFTC, Zier solicited Convergent clients for investment in ZAM while he was an agent of Convergent. He also drew upon Convergent resources, such as operations personnel, to execute certain ZAM related client transactions. Accordingly, Convergent, as Zier’s employer, is responsible for Zier’s acts and omissions.
In connection with these solicitations, Zier made false representations as to ZAM’s performance. For example, he represented ZAM as profitable, when it had in fact suffered substantial losses. He also fabricated false performance data that he provided to existing ZAM investors to conceal ZAM’s losses.
According to the CFTC, Convergent had the ability to monitor ZAM’s financial accounts and Zier’s e-mail correspondence relating to ZAM administration, and in 2014, Convergent compliance personnel discovered that some of ZAM’s account statements and the performance reports being provided to Convergent clients who were participants in ZAM were inconsistent.
From 23 December 2010, until Zier’s death, fraudulent solicitations in ZAM totaled nearly $3 million.