Securities regulators in Arizona have filed an enforcement action against an advisor who has already been banned from the industry for three years by the SEC for alleged compliance violations.
Dharmesh Virendra Vora of Flagstaff, Ariz., and his firm, Vora Wealth Management, were cited by the Arizona Corporation Commission in an Oct. 4 complaint that alleged he carried out "unauthorized transactions" involving high-risk structured notes in client accounts. Vora was given 30 days to respond to the complaint, which is seeking the payment of penalties and disgorgement, and the suspension of his securities license.
In September, the SEC barred Vora from the industry for three years, and ordered him to pay a disgorgement of $1.1 million and prejudgment interest of $231,118, after 15 clients accused him of violating his fiduciary duty and committing compliance failures.
Vora, a resident of Arizona since at least August 2005, according to the new charges, and a licensed investment advisor representative since April 2011, is the sole founder, owner, president, and chief compliance officer of Vora Wealth.
Arizona regulators allege that Vora’s clients were told their investments were in mutual funds, stocks, ETFs, corporate debt, CDs, and other securities that it classified as "conservative" or "mod-conservative," in accordance with preferences expressed in their client profiles. But in reality, the legal documents allege, even the most conservative clients’ money was invested in equity-linked notes (ELNs), risky and complex structured securities whose returns are linked to the performance of four Nasdaq stocks.
“If all four of the underlying securities remained at or above 50% of their market value” the clients would receive “a monthly return in the form of a coupon payment,” the complaint said. But if any of the stocks fell below that threshold, no payments would be generated. Moreover, if any of the stock values fell below their market value when the ELN reached maturity, the clients would receive back less than the original principal they had invested, the complaint sid.
According to the allegations, clients were told that they would receive a net gain of at least 42%. They actually “lost an average of 82% of their invested principal at the time of maturity,” the charges state. “This loss is reflected in Vora Wealth's assets under management,” legal documents claim. “On October 1, 2021, Vora Wealth managed $139,500,000 in assets over 669 accounts. However, on April 4, 2024, Vora Wealth managed only $74,797,158 in assets over 1,065 accounts.”
The state commission accuses Vora and his firm of fraud and orders the defendants to cease and desist from practice and pay restitution and unspecified penalties.
His attorney did not immediately respond to request for comment.