Barry F. Connell, of Chester, New Jersey, an investment adviser representative and stockbroker formerly registered with Morgan Stanley, has been charged by the Securities and Exchange Commission (SEC) in a Complaint alleging that he misappropriated firm customers’ funds. Securities and Exchange Commission v. Barry F. Connell, No. 1:17-cv-00831 (S.D.N.Y. filed Feb. 3, 2017).
According to the Complaint, starting in June of 2015, Connell exercised discretion and provided financial advice to a married couple, customers A and B, in addition to the married couple’s daughter, customer C, and a trust, customer D. Apparently, the customers held fee-based accounts with the firm in which they received asset management and advisory services, wherein compensation was paid to Connell from his firm pursuant to the amount of fees Connell accumulated from the customers.
The Complaint alleged that in December of 2015, despite Connell’s fiduciary obligations to the customers, he misappropriated their assets via the unauthorized issue of checks from the advisory accounts owned by customers C and D, and executed unauthorized wire transfers. Connell purportedly utilized the customers’ assets to fund his lifestyle and cover his personal expenses, wherein fund transfers were directed to companies and individuals who provided Connell with benefits such as the service of a private jet and membership to a country club.
According to the Complaint, authorization documents had been falsified by Connell in order to effect the transactions, wherein Connell claimed to have gained the customers’ permission to wire funds and issue checks from the customers’ accounts. Connell purportedly went as far as writing blank checks on the accounts of customers C and D on an unauthorized basis in order to further his personal endeavors. Consequently, one-hundred transactions had been effected on an unauthorized basis, consisting of accounts transfers totaling $2,000,000.00 and unauthorized payments to third parties totaling $5,000,000.00.
The Complaint alleged that Connell’s conduct was violative of Investment Advisers Act of 1940 Sections 206(1) and 206(2). The SEC has sought relief against Connell which includes civil penalties and disgorgement. Connell was reportedly terminated by his firm in November of 2016, based upon the foregoing allegations of his misconduct.
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