A Texas investment manager who has a long history of criminal behavior for financial fraud has been charged again with defrauding clients, the Securities and Exchange Commission announced Monday.
Clifton Curtis Sneed Jr., who is currently being held in federal prison in Seagoville, Texas, has been charged criminally and civilly with failing to disclose his background to investors, among other things.
According to the SEC's complaint, Sneed held himself out to clients, some of whom he met by targeting members of churches, as an investment expert who could help them earn guaranteed outsized returns. He actively concealed his lengthy criminal and regulatory violations history, falsely claimed to hold numerous financial certifications, and failed to disclose that he was being paid commissions from companies he recommended to clients, the complaint said.
Sneed allegedly received more than $400,000 in fees and undisclosed commissions at the same time that clients lost $1.1 million, the SEC said.
The complaint said Sneed previously pled guilty or was charged with felony securities fraud and other securities violations in Utah, Texas, Georgia and Alabama dating back to 2006. The SEC previously charged Sneed with violations of the antifraud and registration provisions of the federal securities law. Sneed agreed to be enjoined from violating the charged provisions to resolve the earlier actions. The new complaint alleges that he failed to disclose this history to clients.
In the latest complaint, the SEC said Sneed began operating The Trade Group in 2014. He said the firm would provide “financial and investment advisory services to help clients who needed financial assistance and to provide them an opportunity to access more leveraged investments, offering higher rates of return, so they could retire, send their children to college, or expand their church,” the complaint said.
“Sneed marketed TTG in multiple states using flyers, phone calls, in-person seminars, e-mails, and on his website, with a particular emphasis on targeting pastors and churchgoers. Sneed also employed account managers—essentially salespeople—to broaden his marketing activities across the United States,” the SEC said.
Instead of charging investment fees, Sneed charged a “membership” fee of between $5,000 and $20,000 in order for investors to have the right to invest with TTG, the complaint said.
After prospective clients signed the membership agreement and paid Sneed their fee, Sneed would disclose the names of the investments and advise the clients on how to purchase the investments. In some instances, Sneed took custody of the funds his clients wanted to invest and made the investments on their behalf, according to the SEC.
Sneed counseled clients about the relative merits of various investment options. He also repeatedly counseled his clients against investing in the stock market and other more traditional securities investments, such as mutual funds, exchange-traded securities and bonds, claiming these investments would not provide sufficient money for retirement. These recommendations ultimately resulted in TTG clients losing all or substantially all of their investment funds, the complaint said.
The SEC, through the Retail Strategy Task Force and Office of Investor Education and Advocacy, has warned investors to check the background of anyone selling or offering them an investment. Investors can find additional information at Investor.gov.