The SEC has refused to allow a barred investment advisor to come back to the industry, rejecting his argument that he would then be able to pay the fine that he still owed from 10 years ago.
Earlier this week, the SEC denied Daniel Sholom Frishberg’s request to be reinstated as a registered advisor, claiming that the possible benefit is insufficient, and that he didn’t provide enough information to prove that re-admitting him to the industry would be in the public interest.
Back in 2011, the SEC settled a civil action with Frishberg alleging that he had authorized a representative of Daniel Frishberg Financial Services — where Frishberg was the CEO and majority owner — to recommend that clients buy BizRadio promissory notes, the regulator says in an administrative proceeding document published Tuesday. BizRadio was in dire financial conditions at the time so the notes weren’t likely to be repaid, the SEC said at the time.
Frishberg also allegedly failed to disclose the conflicts of interest in the recommendations, such as the use of the note proceeds to cover BizRadio’s operating expenses and salaries, according to the regulator. Furthermore, the complaint alleged that Frishberg knew that the representative who offered the notes had an ownership stake in BizRadio, and the Frishberg also failed to determine whether the notes were suitable for the clients.
As part of the settlement, SEC barred Frishberg from the industry and ordered him to pay a $65,000 penalty, over five installments, by Mar. 1, 2012, the SEC says.
Frishberg failed to meet that deadline, entered into a revised payment plan in 2014 but has yet to pay the full penalty, according to the regulator.
In August 2019, Frishberg filed with the commission to be reinstated as a registered advisor, the SEC says. He claimed that the services he would offer clients would benefit the community and also “be able to earn a living and thereby pay his outstanding civil penalty more quickly than if he was not employed in the securities industry,” according to the regulator.
In denying Frishberg’s request, the SEC also ruled that the statement from Frishberg’s proposed employer didn’t have sufficient detail about how it planned to supervise him. The regulator also said that Frishberg’s failure to complete paying the penalty “is an additional factor indicating that the proposed association would not be consistent with the public interest.”
Cipperman Compliance Services weighed in on the SEC's decision.
“It’s really difficult to get relief from an industry bar, but if you don’t pay your outstanding penalty for nearly a decade, you can pretty much forget it," Cipperman says in a statement.
"And, even if you do get current, you will need to show significant supervision and limitations so that the Commission can get comfortable that they are not releasing a recidivist into the wild,” the compliance consulting firm adds.
Do you have a news tip you’d like to share with FA-IQ? Email us at firstname.lastname@example.org.