SEC Charges Bard With Securities Fraud
The U.S. Securities and Exchange Commission (SEC) has charged a Warfordsburg-area investment adviser and his investment advisory firm with misappropriating hundreds of thousands of dollars, and obtained a temporary restraining order freezing their assets.
Robert G. Bard, 43, and Vision Specialist Group were named as defendants in the SEC's complaint filed July 30 in the U.S. District Court for the Middle District of Pennsylvania in Harrisburg, Pa.
Bard is the owner, manager and sole employee of Vision Specialist Group.
In its complaint the SEC alleges that Bard and Vision Specialist have targeted investors in the Warfordsburg area "with promises of high yields and safety of principal, telling clients that they had invested in safe investments such as bonds, certificates of deposit, and money market funds."
The SEC complaint maintains, however, that "Bard squandered hundreds of thousands of dollars or more of client funds by making risky (and losing) investments in penny stocks and other securities and borrowing on margin."
Bard, through Vision Specialist, the complaint alleges, "perpetrated his scheme by materially misrepresenting and failing to fully disclose the types of investments he made for clients and the performance of clients' accounts."
According to the SEC, Bard "created false statements misrepresenting the true value of client accounts and used Vision Specialist's operating account to cover client withdrawals and pay margin calls so that clients believed their accounts had funds that they did not have."
The complaint further alleges that Bard sometimes overstated client holdings by hundreds of thousands of dollars and used a variety of methods to mislead clients about the true value of their account balances.
The SEC also states in its complaint that Bard "forged client authorization forms to transfer funds between accounts to conceal the dissipation of assets."
The fraud Bard engaged in persisted, the SEC maintains in the complaint, because he presented himself as someone with strong moral values and religious beliefs, and because his clients knew him and his family.
As a result of the SEC's allegations of securities violations, the federal court, last Thursday, issued a "temporary restraining order that freezes Bard and Vision Specialist's assets, precludes them from exercising any authority over client accounts and imposes other emergency relief."
The action taken by the SEC last week is not Bard's first runin with investment regulators. Although he has never registered with the SEC in any capacity, according to the Commission, Bard, from December 1993 to December 2004, was employed as a registered representative at various Financial Industry Regulatory Authority (FINRA) member firms. However, in September 2004, the SEC states, he was terminated from his brokerage firm position after it was discoverd that he had prepared and submitted investment documents that forged customer signatures and other irregularities.
Following FINRA's review of Bard's termination from the firm, Bard signed an acceptance, waiver and consent in October 2005 and agreed to be barred from association with any FINRA member.
Bard incorporated Vision Specialist Group in December 2004 and the firm is registered in Pennsylvania and West Virginia as an investment adviser, according to the SEC.
In May, the firm reported assets under management of approximately $9 million with 140 accounts for 101 to 250 clients in the past fiscal year. The SEC states in its complaint that at the present time Bard has at least $4.4 million in assets under management in 154 accounts at two broker-dealers.
The SEC's complaint alleges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder, and Section 206(1) and Section 206(2) of the Investment Advisers Act of 1940.
In addition to emergency relief, the Commission's complaint seeks permanent injunctions, disgorgement together with prejudgement interest, and civil penalties from Bard and Vision Specialist.
The Commission's investigation is continuing.