CFTC fines investment firm in fraud case linked to CEO's death
(Reuters) — The U.S. Commodity Futures Trading Commission ordered a Washington-area wealth management firm to pay $800,000 on Monday in a fraud case involving the firm's chief executive, who apparently committed suicide in 2014.
Potomac, Maryland-based Convergent Wealth Advisors was ordered to pay the fine to settle charges that its former CEO, David Zier, defrauded Convergent clients who he solicited to invest in a private fund he managed outside of Convergent, named ZAM L.L.C.
Convergent Wealth Advisors did not respond to requests for comment.
From 2007 to 2014, the CFTC found that Mr. Zier falsely told clients ZAM was profitable and gave them fabricated performance statements that concealed substantial losses, according to a press release.
In October 2014, Mr. Zier was found dead at his Virginia home in an apparent suicide just weeks after Convergent's compliance officers began questioning him about irregularities in ZAM's records, Barron's previously reported.
Convergent did not disclose ZAM's total losses. However, the CFTC said that from December 2010 to Mr. Zier's death four years later, Mr. Zier fraudulently solicited $2.9 million in investments in ZAM.
The CFTC held Convergent responsible for Mr. Zier's activities because its compliance department monitored Mr. Zier's emails and tracked ZAM's performance.
Convergent is a registered investment advisory firm managing the assets of roughly 200 ultra-wealthy client families, according to its website.
Previously owned by City National Bank, Convergent was sold to Pathstone Federal Street earlier this year, according to a press release on Pathstone's website.
Pathstone did not immediately respond to requests for comment.
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