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SEC Scores Court Win Against Brokerage Over Fraud Allegations

By Alex Padalka May 17, 2019

A jury in Manhattan federal court ruled in favor of the SEC in its case against a brokerage and two executives there, the regulator says.

The SEC alleged that Portfolio Advisors Alliance, Howard Allen, the indirect owner of PAA, and Kerri Wasserman, PAA’s president, engaged in fraud related to misrepresentations and omissions in the private placement offerings of American Growth Funding II, according to a press release from the regulator.

AGF II and its owner, Ralph Johnson, allegedly promised investors annual returns of 12% and claimed in its offering documents that its financial documents were getting an annual audit when they were not. The SEC charged them with lying to investors when selling them high-yield securities.

The regulator obtained final consent judgments against AGF II and Johnson earlier this year, according to the press release.

In its case against PAA, Allen and Wasserman, the SEC also claimed that they were well aware of the inaccuracies of AGF’s offering documents but kept using them to attract investors, the regulator says.


The jury found PAA, Allen and Wasserman liable on all counts, ruling that they violated antifraud provisions; that Allen and Wasserman aided and abetted PAA’s violations; and that Wasserman aided and abetted Allen’s violations, according to the press release. Allen and Wasserman were also found liable as control persons, the SEC says.