• April 29, 2024
• Mutual Securities

Julie Anne Darrah (CRD#: 2102014) was a previously registered Broker and Investment Advisor.

 

Broker’s History

She entered the securities industry in 2001, and previously worked with National Planning Corporation; Mutual Securities, Inc.; Vivid Financial Management, Inc.; and Wealth Enhancement Advisory Services, LLC.

 

Allegations of Misconduct

According to publicly available records released by the United States Securities and Exchange Commission (SEC), on October 20, 2023, the U.S. District Court for the Central District of California Western Division issued a Complaint as to Defendant Julie Anne Darrah and others.  Plaintiff Securities and Exchange Commission (“SEC”) alleges: The Court has jurisdiction over this action. Defendants have, directly or indirectly, made use of the means or instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities exchange in connection with the transactions, acts, practices and courses of business alleged in this complaint. This emergency action concerns Darrah’s scheme to misappropriate millions of dollars from the bank and brokerage accounts of her clients and spend those funds on herself and on relief defendant PC&J Joint Ventures, LLC, an ailing restaurant company that Darrah co-owns. In doing so, Darrah abused her position as an investment adviser to the clients that she stole from, and violated the fiduciary duties she owed those advisory clients.

 

Darrah’s misconduct is ongoing because she still retains control of certain client assets and has been actively selling and dissipating the ill-gotten proceeds of her misappropriation. The scheme began in at least November 2016, if not earlier, while Darrah was still working for Vivid Financial Management, Inc, which was at the time an SEC-registered investment adviser partially owned by Darrah and where she served as its president and chief compliance officer. Darrah primarily targeted elderly female advisory clients for the scheme, many of whom had come to rely on Darrah for their financial well-being (“the defrauded clients”). Indeed, in addition to giving Darrah discretionary authority over their brokerage accounts, many of the defrauded clients appointed Darrah to serve as a trustee over the trusts they had established for themselves, while others gave Darrah power of attorney to handle their financial affairs. Instead of honoring the fiduciary duty that she owed as an investment adviser to act in the best interest of the defrauded clients, Darrah began stealing from them by funneling money out of the defrauded clients’ brokerage and bank accounts and taking those funds for herself and relief defendant PC&J.

 

In total, between November 2016 and July 2023, Darah misappropriated approximately $2.25 million in funds from the accounts of nine defrauded clients who hired VFM and Darrah as their investment adviser. In addition, the Forms ADV and Client Brochures that Darrah submitted to the SEC on behalf of VFM during the scheme contained false and misleading statements regarding VFM’s custody of its clients’ assets. By engaging in this conduct, Darrah violated Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 207 and 206(1) and (2) of the Advisers Act aided and abetted VFM’s violation of Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 thereunder. The civil action is still pending.

 

In addition, Julie Darrah has been the subject of two other disclosures, which include the following:

• December 2023—“ Client alleges that during the period between June 28, 2013, and January 4, 2022, the representative sold nearly all of the securities held in client’s accounts and transferred the proceeds from the sale of the securities to client’s bank accounts, which she controlled. The RR later stole $702,647.97 from the client’s bank accounts.” The damage amount requested is $702,647.97 and the customer dispute is still pending.
• September 2023—Discharged by Wealth Enhancement Advisory Services, “The reported individual was terminated during an internal review for fraud, wrongful/unauthorized taking of client property, and for violations of investment-related securities law (including those related to custody of client assets), firm policies and expected industry and professional standards, including failure to cooperate with the firm’s internal review.”

 

For a copy of Julie Darrah’s SEC AdvisorInfo, click here.

 

We Help Investors Recover Investment Losses

FINRA Rule 2150 specifically addresses theft and conversion in a customer account, stating “no member or person associated with a member shall make improper use of a customer’s securities or funds.”  This rule includes any “guarantee” that brokers make to customers in relation to losses incurred in a brokerage account.

 

In addition, FINRA Rule 3240 strictly prohibits a financial advisor from borrowing money from a client absent from unique circumstances, such as a familial relationship between the Financial Advisor and the client.  There is also an exception if the client is a financial institution regularly engaged in the business of lending.  The reason for this prohibition is clear—borrowing money from clients creates an immediate conflict of interest and can potentially lead to theft or conversion of client assets.

 

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.