Fraudulent Investment Advisor Discovered in Glen Cove

A Glen Cove-based investment advisor has been charged by the Securities and Exchange Commission (SEC) with engaging in fraudulent activities, generating more than $8 million in illegal commission and fees.

The SEC filed a complaint Thursday against Warren D. Nadel, including his broker-dealer, (WDNC), located on Walnut Street, and his investment advisory firm, Registered Investment Advisers, LLC (RIA), according to newyork.citybizlist.com.

Nadel, 59, of Upper Brookville allegedly took more than $6 million on commissions and at least $2.4 million in “advisory fees,” through misinterpretations and omissions, according to courthousenews.com.

The money manager allegedly told his clients he was buying and selling securities on the open market. He is accused of trading them in-house among his own clients and acquiring improper commissions.

Through both his broker-dealer and investment advisory firm, the SEC's complaint–which was filed in the United States District Court for the Eastern District of New York–said that he persuaded clients “to invest in a purportedly liquid, cash management strategy that engaged in market transactions.”

He also intentionally overstated the value and liquidity of client holdings.

“He inflated the value of clients’ transactions and assets in their monthly statements,” said the federal agency.

Nadel also misrepresented RIA’s assets by claiming he managed more than $400 million, but actually handled only half that, according to Long Island Business News (LIBN).

Clients said that they were unaware of Nadel’s plans until they asked to withdraw their money from his management.

Said LIBN: “It would take a long time for them to leave his investment firm at the prices he had been reporting to them all along.” 

Since Nadel acted as the financial advisor and owned the broker-dealer, he was able to pull off the scam, said the SEC.

The SEC plans to have Nadel pay $8 million in financial penalties.

Jon L. Ten Haagen, CFP, RPC, of Ten Haagen Financial Group would like the SEC and the Financial Industry Regulatory Authority (FINRA) to pay closer attention to Long Island firms.

“Why can’t they focus on the small companies that claim they can operate independently,” he said.

Ten Haagen also offered a bit of advice to investors: “If it sounds too good to be true, it is."