After a 13-month investigation, securities and exchange commission (SEC), Flagstaff Broker Dharmesh Vora was suspended for three years for investing client assets in high-risk structured bonds without providing sufficient disclosure.
The investigation started in August 9, 2023reached a conclusion. September 16th After a total of 15 customer disputes were filed. May 23, 2022and March 20, 2024According to us Government Investment Advisor Disclosures. According to filings found in S.E.C. According to its website, Vola breached its fiduciary duties and committed a compliance violation by investing a significant portion of its advisory clients’ assets in structured notes without making appropriate disclosures.
In addition, Vora and Vora Wealth Management are prohibited from serving as or having any association with brokers, dealers, investment advisers, and similar activities for a period of three years; $1,114,079 And the benefit of foresight $231,118 to SEC.
Vola personally will also have to pay a civil penalty. $300,000 to SEC.
Following his three-year suspension, Vola will be entitled to apply for reinstatement to a self-regulatory body or organization. SEC.
At the time of the ban, Vola SEC As the “Founder, 100% Owner, Principal Investment Professional, President, and Chief Compliance Officer” of Vora Wealth Management.
especially, S.E.C. The investigation revealed that Vora and Vora Wealth received an undisclosed benefit from one of the brokers that purchased the structured notes, which was not disclosed as a potential conflict of interest to customers. Subsidy payments for wine tastings and client events, totaling approx. $32,972 was included as an undisclosed bonus. SEC The company said it creates “potential incentives for advisors to use brokers to purchase investments on behalf of their clients.”
In a lengthy factual section of the investigation’s final report, SEC The investment in corporate bonds was “also inconsistent with Vora Wealth’s disclosed investment strategy to its clients.” of SEC The amount spent by Vora and Vora Wealth is 100 million dollars Although client funds are used to purchase bonds, “structured products are still not listed as an investment category.”
As part of Vola’s efforts to minimize potential risks to his investments, SEC He also said that he did not provide customers with any documentation about the bonds and that those who did receive the information were provided with the information only “after Vora had already made an investment on their behalf.” Investments in the bonds were made “without regard to the client’s stated investment objectives or risk tolerance.” S.E.C. According to the survey results, Vora knows that approximately 75% of Vora Wealth’s clients are “retired and rely on income from their investment portfolios to support their living expenses.”
Several affected customers declined to be interviewed. arizona daily sun Because of the possibility of litigation.
While investing in multiple retirement accounts, Vora hosted the “Retirement Roadmap Radio Show” on 97.1 FM’s The Big Talker. February 2021 to August 2021the video is still available to watch on YouTube.
Vola, who has been the title sponsor of Flagstaff’s Holiday Lights Parade in recent years, has relocated his office from Tokyo. North Humphreys Street to South Woodlands Village Boulevard effective February 1st.
The phone number at this location is currently connected to Specter Wealth, which lists its headquarters in Scottsdale and services are provided through: ultra financial partners.
Vora Wealth’s website began redirecting to Specter Wealth from mid-May to mid-June.
the beginning November 6, 2020through November 4, 2021Vora and Vora Wealth used their power over customer accounts to purchase structured notes. SEC It is considered unsuitable for most customer groups seeking security, income goals, net worth, retirement status, and investment sophistication. The notes were tied to four Nasdaq stocks, and 738 of Vora Wealth’s 872 accounts had invested about $1 million. $124 million For structured notes.
In total, the affected accounts represented 84.6% of Vora Wealth’s clients and 88.8% of the company’s assets under management.
of S.E.C. The investment advisor’s public information indicates the first dispute from a client. May 23, 2022requested $165,000 A claim for damages was filed, but the case was closed without any action being taken as the customer became a party to another dispute. Three others were listed as resolved and the remaining 11 were listed as pending. Three lawsuits were filed and resolved during the following periods: June 9, 2022and October 31, 2022the total payment amount is $488,500 After receiving a claim for damages in total, $1,475,000.
The total settlement is reduced and the first settlement is $210,000 followed by $175,000 for September 2, 2022controversy and $103,500 for October 31, 2022dispute. The remaining 11 pending cases are $8,001,368 The amount of damages claimed is as follows. $5,000 to $3,385,000
All 15 disputes included near-identical statements by Vohra denying wrongdoing and saying he believed the investments were “in line with the suitability and risk assessment” of each client. In the latest Form ADV filed by Vora: April 4, 2024assets under management are approx. $74.8 million For 1,065 accounts of approximately 660 clients. Totals for the same account and client were reported. October 2021and $139.5 million Among the assets under management.
According to SECmost of the structured notes are July 2024 and “Vora Wealth’s customer accounts have realized principal losses totaling more than $500.” $89 million. ”
