by Brian Mahany
Western Pacific Capital and its president, Kevin O’Rourke, were charged a variety of securities violations including failing to give proper disclosures to clients. Western Pacific is a San Diego based investment advisory firm. Unlike stockbrokers, investment advisors owe a very high duty of care to clients.
The SEC says the firm violated its fiduciary duty by not disclosing it was receiving a hidden 10% commission on sales of Ameranth stock. The company also didn’t tell that the stock sold primarily belonged to O’Rourke.
Investment advisors must always act in the best interest of the client. Pocketing an extra 10% commission without disclosing the arrangement is a violation of federal securities rules. How much did these commissions add up to? $482,745 according to the SEC’s complaint.
Both stockbrokers and investment advisors should always disclose their fees to customers. Hidden commission give brokers an incentive to recommend certain stocks solely because of the commissions they can earn and not the soundness of the investment. Undisclosed commissions and bonuses also mean that the customer may be paying an inflated price for the investment.
Customers who suffered losses because of bad advice or undisclosed fees and commissions may have a claim against the individual broker and the brokerage firm itself. Hidden commissions, of course, are often difficult for the customer to discover. One warning sign is a broker or brokerage firm that pushes all clients into the same investment.
If you are the victim of investment fraud, give us a call. Our stock fraud lawyers have helped people across the U.S. Most cases must be handled through arbitration sponsored by the Financial Industry Regulatory Authority (FINRA). These cases can usually be handled on a contingent fee basis.
Mahany & Ertl, LLC – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available in most states.