SEC ALLEGES NEW YORK CITY-BASED FINANCIAL ADVISOR STOLE AT LEAST $20 MILLION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
04/16/2015 02:55 PM EDT

The Securities and Exchange Commission today announced fraud charges against a New York City-based financial advisor accused of stealing at least $20 million from customers to fund his own brokerage accounts and then squandering the bulk of the money in highly unprofitable options trading.

The SEC alleges that Michael J. Oppenheim abused his position as a private client advisor at a global bank and persuaded some customers to withdraw millions of dollars out of their accounts by promising he would purchase safe and secure municipal bonds on their behalf.  Instead, Oppenheim bought himself cashier’s checks and deposited them into his own brokerage account or his wife’s account that he controlled.  Almost immediately after each theft and deposit, Oppenheim allegedly embarked on sizeable trading of stocks and options including Tesla, Apple, Google, and Netflix.  Oppenheim typically lost the entire amount of each deposit, and his brokerage accounts currently show minimal cash balances.  On occasions when his accounts did have positive cash balances, he allegedly wired money to bank accounts in his or his wife’s name.  At least one outgoing wire was used to pay off a portion of his mortgage.  

“We allege that Oppenheim promised his customers that he would invest their money in safe and secure investments, but he seized their funds and aggressively played the stock market in his own accounts,” said Amelia A. Cottrell, Associate Director of the SEC’s New York Regional Office.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Oppenheim.

According to the SEC’s complaint filed in federal court in Manhattan, Oppenheim took illicit steps to conceal his fraud.  For instance, Oppenheim created false account statements when a customer asked for a statement reflecting his municipal bond holdings.  Oppenheim simply pasted the customer’s name onto an account statement reflecting the holdings of another customer, and provided the fabricated statement to convince the customer that he had purchased the municipal bonds for his account as promised.  In another instance, Oppenheim transferred money from one customer to another to replenish the amounts he had stolen earlier.

The SEC’s complaint charges Oppenheim, who lives in Livingston, N.J., with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.  The SEC’s complaint seeks disgorgement of ill-gotten gains plus prejudgment interest and financial penalties as well as permanent injunctions barring future violations.  The SEC’s complaint against Oppenheim names his wife Alexandra Oppenheim as a relief defendant for the purpose of recovering any customer funds transferred to her.

The SEC’s investigation, which is continuing, is being conducted by William Martin, Nancy Brown, Neil Hendelman, and Charles Riely of the New York Regional Office.  The case is being supervised by Amelia A. Cottrell, and the SEC’s litigation will be led by Nancy Brown and William Martin.  The New York Regional Office’s broker-dealer examination team of Michael Kress, Jennifer Fournier, and Ronald Sukhu assisted the investigation.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.