SEC v. Wealth Management

The Commission announced that on March 4, 2010, the Honorable William C. Griesbach of the United States District Court for the Eastern District of Wisconsin entered final judgments against defendants Simone Fevola and Wealth Management LLC and relief defendants WML Gryphon Fund LLC, WML Watch Stone Partners LP, WML L3 LLC, WML Palisade Partners LP, WML Pantera Partners LP, and WML Quetzal Partners LP. The final judgments against Fevola and Wealth Management LLC permanently enjoin them from violating Sections 206(1), 206(2), 206(4) and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, the final judgments require Fevola to pay disgorgement of $1.24 million, plus prejudgment interest of $149,567 and Wealth Management LLC to pay $1,322,209 in disgorgement, plus $148,793 in prejudgment interest. Fevola consented to the entry of the final judgment without admitting or denying any of the allegations in the Complaint. The final judgments against Wealth Management LLC and each of the relief defendants were entered by default for failing to answer the Commission's Complaint.

The Commission commenced this action in May 2008 by filing an emergency action charging Wealth Management LLC, an Appleton, Wisconsin investment adviser, James Putman, its founder and Chief Executive Officer, and Fevola, its former President and Chief Investment Officer, for engaging in a kickback scheme and other fraudulent conduct involving six unregistered investment pools they managed. The Complaint alleges that Putman and Fevola each accepted $1.24 million in undisclosed payments derived from investments made by the unregistered investment pools in 2006 and 2007. The Complaint also alleges that Wealth Management, Putman and Fevola misrepresented the safety and stability of the two largest investment pools and placed clients into these investments even though they were inconsistent with some clients' objectives.