Former SII Investments Inc. financial advisor reportedly stole $1.8 million from his investment clients to support his lifestyle and gambling habit. According to the Complaint filed by the SEC on September 6th, Newsholme concealed the scheme by making various misrepresentations to his clients, falsely reporting that their investments were doing well. He allegedly gave them fake account statements, stock certificates, and forged fake promissory notes purporting to be bonds and other debt instruments. The misconduct, according to the SEC, started in 2013 while Newsholme was a registered financial advisor with the brokerage firm, SII Investments, Inc.
In 2014, FINRA barred him from associating with its members for his failure to respond to its requests for information. Newsholme is also currently facing criminal charges from the U.S. Attorney’s Office for the District of New York.
According to the SEC, instead of investing his clients’ money as promised, Newsholme diverted his clients’ investment funds for his own use, including cashing their checks and pocketing the money. The SEC called the victims “unsophisticated investors who trusted [Newsholme],” many of whom had been working with Newsholme for a long time.
Brokerage firms are required by industry rules to supervise their brokers and should investigate when these red flags appear. Sadly, some firms don’t keep track of their brokers, and their clients don’t know there is a problem until it is too late.
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