|By Richard Burnett, Orlando Sentinel|
|McClatchy-Tribune Information Services|
The problem? It was all a mirage. They had actually lost millions of dollars already; and only a fraction of their holdings were left, regulators say.
Now officials at an
Securities regulators alleged that two now-former brokers with
DuBrule and Tuttle deny any wrongdoing in their hedge fund activity that took place from 2007 to 2010 as the financial crisis caused the stock market to plummet, said their lawyer,
"We will vigorously defend against these claims, and we expect to be vindicated," he said. "The documents my clients provided investors clearly spell out the hedge funds' investment strategy and its risks."
FINRA's complaint alleges the brokers systematically misled their clients, in some cases massively inflating the value of their accounts and pocketing management fees based on the fake asset values.
In 2008 and 2009 alone, DuBrule and Tuttle misappropriated over
Financial experts say the case is a cautionary tale for investors: the riskiness of investing in dubiously valued penny stocks, which aren't traded on any major exchange, and the risk of dealing with brokers who send out client statements, instead of using an independent third-party vendor.
"It should raise red flags on both counts," said
FINRA also alleged securities-related misconduct by Pizzuti involving misleading promotion of his outside financial advice firm,
Pizzuti disputes the allegations, said his lawyer
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