SEC Charges N.J. Investment Advisor With $11 Million Fraud

The U.S. Securities and Exchange Commission announced it charged a New Jersey investment advisor and three of her firms with fraud for allegedly operating a scheme involving the sale of phony promissory notes to investors.

The regulator claims that Sandra Venetis bilked investors, most of which were retirees, of at least $11 million in a plot that began around 1997. She apparently told some of them the promissory notes were guaranteed by the Federal Deposit Insurance Corp. and would earn between 6 percent and 11 percent a year in tax free interest.

“Venetis abused her position of trust to target older investors who were most vulnerable to her egregious lies and misrepresentations,” Bruce Karpati, the co-chief of the SEC’s asset management segment said in a statement. “The SEC’s enforcement action and settlement will ensure that she will never work in the securities industry again.”

Venetis’ investment advisement firm Systematic Financial Associates Inc., along with her accounting and tax preparation firm Systematic Financial Services, LLC, were each charged in the SEC complaint. A third company, Systematic Financial Services Inc. was formed by Venetis to carry out the fraud, the SEC said.

In a statement, the SEC said Venetis agreed to settle the case by repaying an amount that’s to be determined. She will also be barred from associating with any investment advisor, broker, or dealer, while her firm Systematic Financial Associates Inc. had its registration revoked.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio