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Regulators Pursue Enforcement Actions Against Woodbridge Sales Representatives

By George C. Miller, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, June 8, 2018.

Last December, the Securities and Exchange Commission accused the Woodbridge Group of Companies and its founder, Robert Shapiro, of running a $1.2 billion Ponzi scheme and allegedly bilking thousands of retail investors, including many senior citizens, out of their hard earned retirement funds. According to the SEC’s complaint, Woodbridge “swindled seniors into a business model built on lies.”  While the company purported to offer investors secure, fixed interest investments into short-term mortgages that were not subject to market risk, in reality, the SEC alleges, Woodbridge’s business model was a sham. “The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money,” according to the SEC’s press release.  The SEC claims Woodbridge “mov[ed] money from its right pocket to its left” to pay investors. A classic tell-tale of a Ponzi scheme.  Woodbridge filed for bankruptcy protection in late 2017, while its founder continues to contest the SEC’s charges and allegations. 

Recently, FINRA and several state securities regulators have begun investigating and prosecuting enforcement actions against individual representatives who allegedly sold or recommended Woodbridge investments to investors. In early June, FINRA published an Acceptance Waiver and Consent (or “AWC”) settlement agreement barring former FINRA representative Christopher T. Wendel from affiliating with a FINRA member firm in the future. According to the AWC, Wendel violated FINRA Rules 3280, 8210 and 2010 by selling more than $340,000.00 in Woodbridge promissory note investments to four individuals and receiving more than $10,000.00 in commissions on the sales. FINRA further concluded that Wendel provided false written responses to the regulator and gave false testimony during his on the record (OTR) testimony, which almost always results in a permanent bar from affiliating with another FINRA member firm.  There are several other pending investigations and enforcement actions involving former Woodbridge sales representatives. 

Shustak Reynolds & Partners, P.C.’s California FINRA and SEC attorneys routinely represent RIA firms, individual representatives and high-net-worth investors in SEC, FINRA, and state regulatory investigations, enforcement proceedings and arbitrations. Please contact us today for a confidential, complimentary consultation.

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