The SEC has barred a Houston, Texas, investment advisor from operating his financial business and said he defrauded clients by misleading them about their investments.
In an order issued Tuesday, the SEC prohibited Thomas Gary Cooper, owner of Second Mile Wealth Management Inc., from working in the financial industry because of violations of the Investment Advisors Act of 1940. He also was ordered to cease and desist any violations.
Cooper agreed to the settlement without admitting or denying the findings of the complaint.
According to the SEC, Cooper created Second Mile at the end of 2007 and began working with 17 clients. The clients were mostly between the ages of 50 and 80 and had net worths between $125,000 and $1 million. The clients said they had a low level of investment experience.
Between January 2008 and April 2009, one of the worst markets in modern history, Cooper lost $7.8 million in day trading and earned $48,300 in advisory fees. He told the SEC he could not make restitution.
On Cooper’s ADV form filed with the SEC and provided to clients, Cooper said he would provide continuous personal client contact, identify their investment goals, and manage each portfolio in accordance with those goals. According to the ADV, the transactions for each account would be handled individually.
Based on what Cooper told the clients and their prior dealings with him, the clients believed Cooper would invest their money conservatively, the SEC said.
Instead, Cooper created an omnibus account and day traded securities, the SEC said. At the end of each day he zeroed out the account and allocated all profits, losses and remaining securities to the clients’ accounts. However, he was not consistent in how, or at what prices, he executed the allocations.
Most of the clients had been with Cooper for years and implicitly trusted him with their accounts and retirement investments, according to the SEC complaint. The clients could not assess the risk of the investments based on the information provided by Cooper.