Washington, D.C., April 20, 2010 — The Securities and Exchange Commission today charged a Staten Island, N.Y.-based investment advisory firm, its owner, and four associates with operating an Internet-based scam that misleads investors into paying fees for phony stock tips and investment advice from fictional trading experts. The SEC obtained an emergency court order to freeze the assets of the firm and individuals involved. The SEC alleges that Gryphon Holdings Inc., owner Kenneth E. Marsh, and the Gryphon associates induced investors to pay fees of up to $250,000 for securities recommendations that they falsely claim are based on sound research and successful strategies of trading experts with superior knowledge. In an effort to lend legitimacy to the firm’s advisory business, Gryphon touts trading experts with fake names who boast millions of dollars in trading riches as well as top-notch educational backgrounds and prominent experience at major Wall Street firms. Gryphon representatives even fabricated glowing testimonials from George Soros and purported clients who profited by trading securities the firm recommended.
According to the SEC’s complaint, filed in U.S. District Court for the Eastern District of New York, investors who followed the guidance of Gryphon’s purported experts have suffered significant losses by trading on those tips or, in at least one instance, by allowing Gryphon to trade on their behalf.
“Gryphon and its associates attracted clients through postings on the Internet that falsely exaggerated their investment prowess,” said George S. Canellos, Director of the SEC’s New York Regional Office. “They sold a bill of goods by pretending to be legitimate money managers with a long track record of extraordinary returns, distinguished clients, and hundreds of millions of dollars under management.”
David Rosenfeld, Associate Director of the SEC’s New York Regional Office, added, “They touted offices on Wall Street and around the world while, in reality, defrauding investors from a strip mall on Staten Island. Gryphon was nothing more than a sham designed to separate clients from their money.”
The SEC specifically alleges that Gryphon falsely touted that it:
Has significant trading operations
Manages or advises hedge funds with holdings in excess of $1.4 billion
Has a principal who “pull[ed] in revenues that exceed $50 billion”
Has a “self made billionaire” who is a “great stock picker”
Has key personnel who were educated at prestigious institutions or who were affiliated with major investment banks
Received an endorsement from George Soros
Posted By Valerie Garner
Categories: Business, Finance
Tags: corruption, investigation, SEC