The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against an investment advisor in California federal court on accusations of deceiving a professional athlete client and his wife in relation to inflated management fees of more than $1 million.
The SEC claims that the advisor, Jeremy Drake, charged the unnamed athlete and his wife 1 percent in management fees but told the couple the fee was between 0.15 percent and 0.2 percent. The fee difference resulted in a payment to Drake of $1.2 million more than what he represented to his client.
In order to conceal the discrepancies, Drake falsified documents and created a fake persona to supply false evidence to corroborate his claims. When Drake was confronted by the athlete’s wife, he told her that reporting the issue to the brokerage firm would create bad publicity for the couple. The athlete’s wife refused and came forward resulting in the termination of Drake.
SEC Seeks Disgorgement of Funds
The SEC claims for violating the Investment Advisers Act and seeking disgorgement of all the funds Drake earned from his alleged misconduct. Of the $1.5 million Drake received, the SEC alleges that $900,000 came from incentive-based compensation related to the fees paid by his clients.
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If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.