Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that Broker Richard Crabtree (Crabtree) has been accused by investors of engaging in fraudulent misappropriation of their funds. According to records kept by The Financial Industry Regulatory Authority (FINRA), it appears that Crabtree was employed by Merrill Lynch, Pierce, Fenner & Smith Incorporated at the time of the activity. If you have been a victim of Crabtree’s alleged misconduct our firm may be able to assist you in recovering funds.
FINRA BrokerCheck shows a final customer complaint on September 23, 2022.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (‘Securities Act’), Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 (‘Exchange Act’), Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 (‘Advisers Act’), and Section 9(b) of the Investment Company Act of 1940 (‘Investment Company Act’) against Richard M. Crabtree (‘Respondent’ or ‘Crabtree’). The Commission finds that Crabtree, defrauded his advisory client about the investments in the client’s accounts, their performance, and the value of the client’s assets. Crabtree, who was a Senior Vice President at a prominent investment adviser and resident director of the Annapolis, Maryland branch office of the investment adviser, deceived the client into believing that he had invested $250,000 of the client’s funds into a private investment partnership that was held outside of the Investment Adviser. Crabtree falsely represented to the client that the trading strategy was highly profitable and that the client’s interest in the private investment partnership grew to as high as approximately $10 million. However, Crabtree never invested any of the client’s funds into a private investment partnership, and none of its profits were real. To perpetuate and conceal this fraud, Crabtree repeatedly falsified records, including portfolio review reports, trading records, data in the investment adviser’s system, and mortgage payout letters, and liquidated securities in one of the client’s advisory accounts. As a result of his conduct, Crabtree willfully violated Sections 17(a)(1) and 17(a)(3) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Advisers Act.
FINRA BrokerCheck shows a final customer complaint on September 15, 2022.
Respondent violated sections 11-301(1), (2) and (3), 11-302(a)(1), (a)(2) and (a)(3) and (c), and 11-306 of the Act by telling a client that he had invested the client’s assets into an investment partnership when in fact he had not, fraudulently representing that the client’s investment in the partnership was growing and appreciating in value, including by sending the client fictitious computer screenshots and false performance reports containing the purported value of the partnership investment, and falsely representing that he was using the profits from the client’s partnership investment to make payments on the client’s mortgages when in fact he was using funds from the client’s advisory account and, when there were insufficient funds in the advisory account, selling securities in the advisory account to pay the mortgages.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000,000.00 on September 24, 2020.
The attorney representing the customer alleges misrepresentations from Fall 2016 until August 2020.
Our firm is highly experienced in pursuing cases for defrauded clients whose advisors accept client loans or sell securities through OBAs. Engaging in the sale of unapproved investment products, fake investments that conceal misappropriated funds, and other fraudulent activities is referred to as “selling away” in the industry—a severe violation of securities regulations. “Selling away” is the term used in the industry when a financial advisor solicits investments in companies, promissory notes, or securities without obtaining approval from their affiliated brokerage firm. In some cases, these investments are legitimate, but more often than not, they result in Ponzi schemes or financial advisors converting funds for personal use.
However, federal securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. Firms are required to have protocols in place to oversee their brokers by tracking each advisor’s activities and public interactions. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Crabtree has been in the securities industry for more than 34 years. Crabtree has been registered as a Broker with Merrill Lynch, Pierce, Fenner & Smith Incorporated since 1988.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.