FS Broker Richard Grant Cody Pleads Guilty To Fraud Charges
Richard Grant Cody (CRD#: 2794558, Spring Lake, New Jersey), a former IFS Securities registered representative, has pleaded guilty to the United States Attorney for the District of Massachusetts’ charges of Cody committing investment advisor fraud against retired investors in the state of Massachusetts, and making a false declaration under oath in a court proceeding (Case #17-cr-10291). On November 9, 2018, Cody was convicted of violating 18 U.S.C. 80b-6, 18 U.SC. 80b-17, and 18. U.S.C. 1623(a). Cody is expected to be sentenced on February 4, 2019.
The United States Securities and Exchange Commission (the “SEC”) brought a civil action against Cody for his alleged fraudulent and deceptive activities:
The SEC Complaint Against Richard Grant Cody (Case 1:16-cv-12510-FDS)
The SEC filed a Complaint against Cody in his individual capacity and doing business as Boston Investment Partners, LLC. The Complaint alleged that while Cody was a broker representative and investment adviser, he defrauded three investors over the span of several years by covering up the fact that (1) investors’ accounts sustained severe investment losses, and (2) monthly payments to investors depleted their savings.
Apparently, losses had been concealed by Cody by way of him misleading the investors. For instance, Cody was alleged to have led investors to assume that their investments had held their value. Cody supposedly misled investors by telling them that the gains from those investments had been withdrawn to make payments. As a result, investors did not know that the withdrawals came from their principal. In reality, according to the Complaint, the investors’ accounts were being quickly exhausted. The SEC stated that at least two accounts were depleted by mid-2014.
Richard Grant Cody Allegedly Engaged In Deceptive Tactics To Conceal His Fraud
The SEC’s Complaint alleged that Cody engaged in several deceptive activities to prevent investors from uncovering his fraud. First, Cody apparently effectuated the transfers of investors’ funds into their retirement account by using another source than the investors’ own accounts. That way, investors were not aware that their funds had been depleted. Second, Cody apparently falsified his responses to investors, representing that the investors’ money had been placed in an annuity. Cody purportedly provided investors fake documentation that reflected that the investors purchased an annuity held with a reputable financial company.
Third, Cody seemingly provided customers with fake tax documents that showed distributions coming from investors’ retirements accounts and the withholding of tax pertaining to those distributions. Cody allegedly did this to conceal that the investors’ accounts were practically depleted. For instance, SEC stated that Cody told an investor in March of 2016 that the investors’ accounts were still worth $1,280,000.00 when the accounts were estimated to be worth $162,560.00. Because of the extended time period which Cody allegedly deceived investors, the investors were unable to take advantage of any mechanisms to mitigate or prevent their losses from accruing. Indeed, the investors were retired – they did not have time to recover.
SEC Seeks Permanent Injunction Against Richard Grant Cody
Therefore, SEC alleged that Cody engaged in investment advisor fraud in violation of Section 206(1) and 206(2) of the Investment Advisors Act. Also, SEC charged Cody with engaging in securities fraud in violation of Section 10(b) of the Securities Exchange Act. Among other things, SEC sought for Cody’s assets to be frozen; that Cody be disallowed from having any authority to engage in investment business; that a permanent injunction be placed against Cody from engaging in continued violations of the Exchange Act and Advisers Act; that Cody be disgorged of his illicit gains; and that Cody face civil penalties due to Cody’s egregious conduct.
FINRA Actions Against Richard Grant Cody
SEC is not the only regulator to go after Richard Grant Cody for his egregious conduct. In fact, the Financial Industry Regulatory Authority (“FINRA”) Department of Enforcement charged Cody with making excessive and unsuitable trades in investors’ accounts. FINRA’s Department of Enforcement also accused Cody of giving investors statements that falsely represented the value of the investors’ investment accounts and the holdings contained in those accounts. Ultimately, FINRA’s Appeals Panel concluded that Cody made those excessive and unsuitable trades, and gave investors’ misleading statements. Accordingly, FINRA fined Cody and ordered that he be suspended from having any association with a FINRA member between January 7, 2013 and January 6, 2014.
Later, FINRA barred Cody indefinitely in a Default Decision rendered on August 7, 2017, and made final on September 7, 2017. Apparently, FINRA Department of Enforcement charged Cody with giving FINRA investigators false and misleading information in response to FINRA’s request for his testimony and documentation. FINRA’s investigation apparently arose from a customer’s allegations that Cody continued to discuss investment strategies and trades with investors despite being suspended by FINRA at the time. FINRA apparently discovered that Cody made repeated violations of the terms of his suspension by, inter alia, advising investors’ on investments and making trades for them. Subsequently, FINRA stated, Cody failed to give FINRA information and documents, and failed to appear for testimony. Cody evidently failed to answer or respond to the Complaint or the Default Motion filed by the Department of Enforcement.
Customer Disputes Concerning Richard Grant Cody
Twenty two investors have brought investment-related disputes about Cody’s sales practice violations. Those investors held accounts with Cody while he was registered with Westminster Financial Securities, Inc., Concorde Investment Services, LLC, IFS Securities and Leerink Swann and GunnAllen Financial. Some of the recent complaints from customers are listed below:
August 23, 2017 Arbitration
On August 23, 2017, customers of Westminster Financial Services, Inc. and Concorde Investment Services, LLC brought FINRA Arbitration #17-02079 (Aug. 23, 2017). First, the customers allege that Cody defrauded them and engaged in deceitful activities. Second, customers alleged that Cody made trades from 2011 to 2016 in their retirement accounts without their permission. As a result, on August 2, 2018, $165,000.00 in compensation was provided to investors to settle the matter.
May 18, 2017 Arbitration
Westminster Financial Services, Inc. and Concorde Investment Services, LLC customers filed FINRA Arbitration #18-00849 on May 18, 2018. They alleged that Cody engaged in negligent activities, breached a fiduciary duty, made unsuitable trades in their accounts, and churned their investment accounts from 2013 to 2016. The firms believe that the customers have requested more than $5,000.00 in damages. This matter is still underway.
November 28, 2016 Arbitration
A customer of IFS Securities and Concorde Investment Services, LLC brought FINRA Arbitration #16-03414 on November 28, 2016. The customer claimed that Cody made unauthorized wire transfers from the customer’s account from June 2016 to October 2016. Those transfers, according to the customer, were never supervised by the firm. After having reviewed the customer’s allegations, on January, 31, 2018, the firm opted to pay the customer $426,500.00 to settle the matter.
IFS Securities terminated Cody on September 12, 2016. The firm alleged that Cody’s termination was due to him allegedly selling away from the firm and forging customer signatures on documents.
Have you experienced losses by investing with Richard Grant Cody? If so, contact Soreide Law Group at (888) 760-6552 and speak with an experienced attorney about the possibility of recovering your investment losses. Soreide Law Group represents clients nationwide and only charges a fee upon recovery of investment losses.