California regulators have revoked the state securities license of a “five-star” manager of dozens of private investment funds after uncovering “numerous" alleged securities violations.
William Michael Jordan, principal and owner of Laguna Hills, Calif.-based William Jordan Investments, was barred from the securities industry on Wednesday via a consent order issued by the California Department of Business Oversight, which regulates investment advisors in the state, according to a department press release. The same action revoked William Jordan Investments’ securities license.
State regulators allege that Jordan failed to disclose losses to investors, charged fees based on inflated account values and sold unregistered securities through the affiliates. Jordan agreed to the consent order without admitting or denying the state regulators’ findings.
As an RIA, William Jordan Investments reportedly managed more than $100 million in assets for more than 100 investors within more than 20 affiliated private funds, according to state filings. Per court filings, most of the affiliated funds appear to have been private real estate offerings managed by Jordan himself.
Jordan himself was once recognized as a “five-star” wealth manager by Crescendo Business Services, an independent professional organization that claims to select honorees based on customer evaluations, industry professional evaluations and regulatory review.
Jordan is also author of “The Seven Percent Solution,” a book purported to offer strategies that produce 7 percent annual returns.
Based on the findings of a regulatory investigation spanning 2015 and 2016, California alleges that Jordan and his firm were selling unregistered securities issued by the affiliates by means of misstatements and omissions of fact.
Jordan allegedly told his clients that annual independent audits would be performed of the affiliated companies’ assets, when no such audits occurred, and failed to disclose large losses in the value of the companies’ assets to new investors, according to California regulators.
Jordan and his firm also allegedly failed to disclose large losses in value to his clients, never conducting the annual independent audits that could have detected the losses, according to regulators, who claim Jordan “unjustly” enriched himself by continuing to charge clients hundreds of thousands of dollars in annual investment advisor fees based on the inflated values of clients’ investments.
The regulators also allege that Jordan did not disclose his prior Finra disciplinary history. Finra levied a $21,300 fine and a three-month suspension on Jordan in 2012 after he allegedly sold $90,000 worth of unsuitable capital appreciation bonds to his clients, according to Finra's BrokerCheck website. The bonds’ principal issuers used the capital raise as a slush fund for business and personal expenses, depleting all investor funds.