A broker in Bellevue, Wash., and his firm Black Diamond Securities LLC lost an estimated $4 million of customers funds in roughly seven months through risky, undisclosed options trading and by charging excessive and concealed trading commissions, according to a complaint filed by the Securities and Exchange Commission.
The SEC alleges that Richard A. Finger Jr., 32, and Black Diamond in Kirkland, Wash., made risky undisclosed option trading that resulted in an estimated $1.9 million in trading losses, according to the complaint filed Sept. 8 in Federal District Court in the Western District of Washington. At the same time, the SEC alleges, Finger charged customers $2.1 million in excessive, concealed commissions that he diverted to his own personal bank account to support a lifestyle that included a home and luxury vehicles.
The SEC says Finger opened his firm in February and began managing nearly $5 million in assets, mainly for friends and family members. Finger set up approximately 40 accounts for 25 customers
The SEC alleges that Finger concealed his losses and theft from customers by providing them with doctored account statements that inflated their account balances and understated his commission charges.
Of the nearly $5 million deposited by customers into Black Diamond Securities since February, only about $500,000 remains in the accounts, according to the SEC.
The SEC is seeking permanent injunctions against Finger and his firm Black Diamond Securities from engaging in the financial securities business; a freeze on all accounts; an accounting of all defendant's assets; a disgorging of any remaining ill-gotten gains; and unspecified civil monetary penalties.