The Securities and Exchange Commission accused a San Diego-based investment adviser of misappropriating over $1million in soft dollar commissions, as well as cherry-picking trades to favored clients.
J.S. Oliver Capital Management, its president, Ian O. Mausner, and its chief compliance officer, Douglas Drennan, were accused of using $1.1 million of soft dollars for personal benefit.
The SEC alleged that the following soft dollar commissions were stolen by Mausner and Drennan: (1) $329,265 paid to Mausner’s ex-wife for amounts due pursuant to a divorce agreement; (2) $300,000 in grossly inflated “rent” paid to a company Mausner owned, the majority of which was funneled directly to Mausner’s personal bank account; (3) approximately $480,000 paid to Drennan’s company, Powerhouse Capital, Inc. (“Powerhouse Capital”), for purported outside research and analysis performed by Drennan, who was actually a JS Oliver employee; and (4) nearly $40,000 in payments for fees on Mausner’s personal timeshare in New York, New York.
Douglas Drennan, who was the CCO of J.S. Oliver, also claimed to be an outside research analyst for JS Oliver, participated in and substantially assisted with some of the misconduct concerning the misuse of soft dollars.
The SEC’s administrative order can be viewed at http://www.sec.gov/litigation/admin/2013/33-9446.pdf.