David O. Braeger, of Irvine California, a stockbroker with Newport Coast Securities, Inc., was charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that Braeger converted customer funds and made misrepresentations concerning investments. Department of Enforcement v. David O. Braeger, No. 2015045456401 (July 20, 2016).
According to the Complaint, customers TH and SE provided Braeger with $30,000.00 in funds in July of 2009, during which time Braeger was associated with Newport Coast. The customers reportedly provided the funds to Braeger to invest in Rubicon Capital Appreciation Fund through a private offering. Apparently, Rubicon Capital Appreciation Fund was created and managed by Braeger.
FINRA contended in the Complaint that the customers’ funds were supposed to have been placed in an escrow account pertaining to the Fund offering, or alternatively delivered to the Fund’s escrow agent. However, once the customers provided the funds to Braeger, he never utilized the funds for the intended purpose, nor did he ever give the money back to the customers. FINRA alleged that Braeger’s conduct was violative of FINRA Rules 2150(a), 2010 and NASD Conduct Rule 2330(a).
The Complaint further stated that Braeger concocted a scheme to hide his aforementioned conduct by falsifying, both orally and in written fashion, statements that were made to TH and SE on repeated occasions. In one case, from March of 2011 through April of 2014, Braeger made a false representation to TH and SE regarding the Fund’s status, claiming that it was open. In reality; however, the fund was closed in July of 2010 and had been liquidated. Apparently, investors other than TH and SE received the return of their investment.
The Complaint provided another example of Braeger’s deceptiveness, where from August of 2009 through April 2001, TH and SE received quarterly account statements from Braeger which deceptively stated to TH and SE that their monies were invested in the Fund, when such was not the case.
Braeger purportedly lied a third time to TH and SE by providing annual tax documents to the individuals, claiming in the documents that the monies had been invested in the Fund. The tax documents apparently stated values and shares of ownership interest in the Fund belonging to TH and SE for the 2011, 2012, as well as 2013 tax years.
FINRA noted numerous times that the aforementioned Fund had been dissolved in 2010, making Braeger’s statements referenced in his documents provided to TH and SE false and misleading. FINRA claimed that Braeger’s false statements constituted misrepresentations, and claimed that such conduct was violative of FINRA Rule 2010.
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