A chief compliance officer is one of three individuals on the receiving end of charges by the Securities and Exchange Commission for illegally selling securities in unregistered transactions to retail investors while acting as an unregistered broker.
Matthew Walker is the managing partner and chief compliance officer of Pinnacle Plus Wealth Management, a limited liability company doing business as a state-registered investment adviser in Colorado, Kansas, and Missouri. According to the SEC, from June 2017 through June 2018, Walker acted as an unregistered broker on behalf of 1 Global Capital, a merchant cash advance company.
The SEC’s complaint filed Monday alleges Walker touted 1 Global’s securities to prospective investors as a “safe and secure alternative to the stock market.” Walker also repeated 1 Global’s “false assertions” that its notes weren’t securities, “despite being confronted with several red flags that should have alerted him that 1 Global’s assertions were not true and that he might be illegally selling securities in an unregistered offering,” the complaint states. Consequently, Walker reaped more than $393,000 in transaction-based commissions.
According to the SEC, Walker sought the opinion of compliance firm RIA in a Box as to whether the notes were securities, “but all that firm did was review 1 Global’s sales and marketing materials and have one telephone conversation with 1 Global’s marketing director before concluding it was ‘comfortable with the process,’” the complaint states. “RIA In A Box never conducted any independent investigation, which Walker knew. In approximately March of 2018, Walker retained a new compliance firm, which almost immediately raised questions about whether 1 Global’s notes were securities.”
Despite the second compliance firm’s concerns, Walker continued his illicit activities for another three months, the SEC states.
In its litigated complaint against Walker, the SEC seeks an injunction and a civil penalty. The agency previously charged 1 Global, its former CEO Carl Ruderman, and others with operating a fraudulent scheme to misappropriate millions of dollars from retails investors.
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