Court Orders Bard To Pay $2.5M Penalty
Two-and-a-half years after the U.S. Securities and Exchange Commission (SEC) brought charges of securities laws violations against Warfordsburg financial advisor Robert Glenn Bard and his company, Vision Specialist Group, a federal judge last Thursday found the accused “jointly and severally liable” for a civil penalty of $2.5 million.
U.S. District Court Judge W. Caldwell issued the February 2 order requiring Bard to pay a civil penalty after finding that Bard’s behavior was egregious, that there was no evidence that his behavior was a result of an “innocent mistake” and that the “recurrent nature” of his conduct was also “substantial.”
Judge Caldwell further stated in the court order that “Bard was a financial advisor and owed a fiduciary duty to his clients. He lied to 33 clients on 146 separate occasions about what type of securities and holdings they had, where the assests were, and the value of the assets. He charged at least one client excessive fees.”
Caldwell also agreed with the SEC’s assertion that Bard had demonstrated a lack of cooperation with authorities, noting that he denied sending misleading account statements to his clients when he had. Bard also continued to control client funds and perform tax and investment services in violation of a court-issued preliminary injunction that prohibited him from doing so.
Bard’s actions were further found by the court to have created a substantial risk of loss. “After lying to clients, Bard lost $2,500,000 in trading losses,” the court order stated.
The SEC had asked for the highest level of penalty to be brought against Bard, arguing that it was warranted under securities statutes. Caldwell said in the court order that to impose such a penalty, the defendants’ conduct must involve “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.” The violation must also have “directly or indirectly resulted in substantial losses or created a signigicant risk of substantial losses to other persons.”
“There is no dispute that both requirements are met,” Caldwell said in the court order.
The SEC had asked for a civil penalty of $4,030,000, the defendants a penalty of $450,000 or less.
Security fraud accusations were first made against Bard and his firm in a civil lawsuit filed by the SEC in the U.S. District Court for the Middle District of Pennsylvania, Harrisburg, Pa., in July 2009. In that suit the SEC maintained that Bard’s securities fraud occurred from at least July 2006 through July 2009 and that Bard had cheated investors out of hundreds of thousands of dollars.
The court ordered an emergency temporary restraining order to keep Bard from perpetrating any further securi- ties fraud, and on Aug. 11, 2009, Caldwell granted a preliminary injunction that also included an asset freeze.
Bard was found in contempt of court for violating that preliminary injunction in April 2011.
In November 2011, Caldwell made a summary judgement ruling, at the request of the SEC, that found Bard and his firm in violation of federal securities laws, and he ordered a permanent injunction prohibiting Bard and Vision Specialist Group from providing financial services. Bard was further ordered to pay $450,000 in disgorgement, plus prejudgement interest, for profits connected to the securities violations.
The judge also ruled then that although he found a civil penalty appropriate, a hearing would be scheduled to determine an appropriate amount.
Bard has until March 12, 2012, to pay the disgorgement amount and the civil penalty, a total of $2,950,000, plus whatever the prejudgement interest is determined to be. The SEC must send Bard an assessment of the total amount owed within 14 days of Feb. 2.
According to the court order, Bard claims that he has no income and that “he owns property jointly with his wife and other family members who should not be subject to a penalty.” The SEC maintains that because he is young and well-educated, Bard has significant earning power. Bard argues that because of the permanent injunction against working in financial services, he has no future earning potential.
Bard incorporated Vision Specialist Group in December 2004, and the firm was registered in Pennsylvania and West Virginia as an investment advisor.
In May 2009, Vision Specialist Group reported assets under management of approximately $9 million with 140 accounts for 101 to 250 clients in the past fiscal year. The SEC stated in its July 2009 complaint that Bard had at least $4.4 million in assets under management in 154 accounts at two broker-dealers.