A Buffalo, N.Y., money manager has been barred from the financial industry for putting his financially naive clients in a risky hedge fund, the SEC announced in a complaint Monday.
Walter F. Grenda Jr. also was ordered to pay nearly $80,000 in disgorgement, penalties and interest. Many of the clients who lost money were retirees living on fixed incomes, the SEC says.
Also named in the complaint is Reliance Financial Advisors LLC, a registered investment advisor in Buffalo, which is now defunct, that Grenda co-founded and co-owned.
Grenda advised clients to invest in a hedge fund, the Prestige Wealth Management Fund LP, which was far riskier than he portrayed, the SEC says. The fund was founded by two people, one of whom had no experience in managing a hedge fund and the other who had no experience in money management or fund management at all, the SEC says. Grenda did not tell his clients about the fund founders, but instead portrayed them as experienced managers of a fund that was doing well.
Many of the clients Grenda sold the Prestige investments to were long-time clients who trusted him, the SEC says. Grenda convinced 23 clients to invest $8 million in the fund. He withdrew what was left of his clients’ money from Prestige shortly before the fund collapsed in December 2012, having lost 80 percent of its value.
Grenda also borrowed $175,000 from a mother and daughter who were clients of his. He told them he would use the money to grow his business when he actually used the money to pay personal expenses and debts, according to the complaint.
Grenda convinced some of his clients to turn in annuities to invest in Prestige, costing them $290,000 in surrender fees. The SEC says he knew his clients and their economic circumstances well.