Operations Manager Charged with Aiding/Abetting Securities Fraud

The SEC accused the operations manager of a state registered investment adviser of aiding and abetting her boss’s fraud by impersonating clients to gain online account access.  The SEC maintains that the operations manager, under the direction and the supervision of the firm’s principal, telephoned a broker and impersonated a client to create on-line access to client funds that the principal ultimately misappropriated as part of a broader scheme involving almost $400,000 in client funds.  The principal, also a defendant in the enforcement action, has left the United States.  The SEC charges that the operations manager “knew or recklessly disregarded” that her boss’s conduct “was improper and knowingly rendered…substantial assistance.”

OUR TAKE: Don’t help your boss commit securities fraud.  There is no “dutiful assistant” or “just following orders” defense whether or not the SEC can show you personally benefitted.  In this case, the trusty assistant was left holding the liability bag when her boss fled the country.