On January 6, the New York Times ran a story on Philip Horn, a Wells Fargo financial adviser in the Los Angeles area who recently pleaded guilty to defrauding Wells Fargo and more than a dozen of his clients out of at least $732,000.
Horn, described by clients as charismatic and outgoing, “a great guy and a straight shooter,” spent a good deal of his time at the upscale Braemar Country Club. The club was a lucrative source of clients for Horn, as well as the scene of a tense, public confrontation with one of his defrauded investors. It appears that Horn bilked numerous of his fellow club members out of sums rising into the six figures and perhaps beyond.
Though the Horn affair provides the article’s narrative hook, its true focus is on a much bigger issue:
While Mr. Horn is a relatively minor player in the pantheon of financial fraud, his actions highlight the persistent problems with policing the industry, even after the wave of rules enacted since the collapse of Bernard L. Madoff’s giant Ponzi scheme in 2008 ... Every month, the Financial Industry Regulatory Authority, a Wall Street watchdog, penalizes more than 100 brokers for various actions, including unauthorized trading and fraudulent activities ….Unfortunately, the Horn case and others like it show that financial fraud is alive and well in the post-Madoff era. The SEC and other federal and state regulators have more than enough large-scale investigations to keep them busy. As a result, relatively small-scale financial advisers like Horn who defraud their clients are often able to slip under the enforcement authorities’ radar for years.
For more information, contact Preti Flaherty Attorney Michael S. Smith or visit Preti's Financial Services Practice Group page to learn more.
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