SEC Charged Former Brokers Minish “Joe” Hede and Kevin Graetz with Selling Away
Last August we told you the Securities and Exchange Commission filed charges against two former advisors, Minish “Joe” Hede and Kevin Graetz, for acting as unregistered brokers in the sale of securities issued by Belize Infrastructure Fund I, LLC (Belize Fund).
On February 12, 2021, a final judgment was entered by consent against Hede and Graetz and the regulator reportedly barred both Graetz and Hede for allegedly selling promissory notes issued by Belize Infrastructure Fund I, LLC to customers of the Broker-Dealer while knowing that the Broker-Dealer firm had declined to approve the investment.
According to the Financial Industry Regulatory Authority (FINRA), Hede and Graetz were employed with Paulson Investment Company from 2013 until 2017.
Hede and Graetz purportedly sold approximately $9.6 million worth of Belize Fund notes to their customers, despite their member firm’s disapproval. As alleged, by selling a security that was not approved by the firm, Hede and Graetz engaged in a prohibited practice called “selling away.” According to the complaint, Hede and Graetz allegedly profited through the commissions from the sales, while the firm’s customers suffered significant losses.
Further, the SEC charged Belize Fund and its owner, in 2018, alleging that the owner misappropriated more than $5.98 million of funds obtained from investors in Belize Fund notes and “used the stolen principal to fund his family’s lavish lifestyle.”
The owner of the Belize Fund reportedly pled guilty to fraud and conspiracy charges in February 2019. According to numerous reports, he scammed almost 40 investors out of approximately $22 million in a “Ponzi-like scheme”.
When a FINRA registered representative conducts business outside the scope of the brokerage firm where they are registered, the act can be considered “selling away.” Some brokers, looking to supplement their income, will go outside the traditional market, trying to find other products to push.
If a registered broker “sells away” from their firm, the brokerage firm may still be liable for negligent supervision of their broker representative and may be responsible for investment losses in a FINRA dispute resolution claim.
When brokers abuse client accounts or conduct transactions that violate securities laws, such as selling away or making unsuitable investments, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
If you invested in the Belize Fund with Minish “Joe” Hede or Kevin Graetz, the securities attorneys of The White Law Group may be able to help you. For a free consultation with a securities attorney, please call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.