The Securities and Exchange Commission (SEC) announced on April 16, 2015 that it filed a complaint in the United States District Court for the Southern District of New York alleging that Michael J. Oppenheim defrauded former clients out of $20 million dollars. Mr. Oppenheim was previously employed and licensed to recommend the purchase and sale of securities by JP Morgan Securities LLC, according to his publicly available FINRA CRD Report.
According to the SEC’s announcement and complaint, Mr. Oppenheim used his position as a financial advisor to convince two former clients to withdraw approximately $12 million from their accounts and give the money to him upon false promises that the money would be invested in “safe and secure municipal bonds for their accounts.” However, the SEC complaint alleges that Mr. Oppenheim instead invested the ill-gotten money into either his own brokerage account or that of his wife, and subsequently lost the bulk of the funds in a risky options trading strategy.
The SEC complaint goes on to allege that after losing the investors’ money, he created fake account statements to make it look as though the money was not lost. He also allegedly transferred money between other investors’ accounts to replenish money he stole earlier. In total, the SEC complaint alleges that approximately $20 million was taken from Mr. Oppenheim’s clients’ accounts from March 2011 through October 2014, which, if true, would have been while he was licensed by JP Morgan Securities LLC to recommend securities transactions to public investors.
Broker-dealers such as JP Morgan Securities LLC has the affirmative obligation to approve each employed broker’s brokerage accounts, and therefore supervise such accounts. Broker-dealers have this supervision obligation for many reasons, which include stopping fraud: if a broker steals money from a public investor, he or she may very well put this money into a brokerage account, so substantial and repeated large cash deposits may constitute a “red flag” that could indicate a securities violation. It does not appear that the SEC has brought any charges against JP Morgan Securities LLC. According to a New York Times article on the subject dated April 16, 2015, the bank alerted federal authorities regarding the alleged theft.
Malecki Law has previously investigated and successfully handled securities arbitration proceedings concerning issues related to broker theft from customer accounts that should have been supervised by their employing broker-dealers. If you believe you have suffered losses as a result of questionable actions taken in your securities account, please contact us immediately for a confidential consultation.