• February 16, 2024
• Partnervest Advisory Services

Marc Jay Frankel (CRD#: 2671700) is a previously registered investment advisor and broker.

 

Broker’s Background

He entered the securities industry in 2010 and previously worked for Partnervest Advisory Services, LLC.

 

Allegations of Misconduct

According to publicly available records released by the Securities Exchange and Exchange Commission (SEC), in January of 2024, the SEC instituted public administrative proceedings against Marc Frankel. On March 2, 2023, Respondent pled guilty to one count of Wire Fraud in violation of Title 18, United States Code, Section 1343 before the United States District Court for the Central District of California, in United States v. Marc Jay Frankel, Crim. No. CR-22-00599- GW (C.D. Cal.

 

As part of his guilty plea, Respondent admitted as the factual basis of his plea agreement that he (“Defendant”) worked as an Investment Advisor Representative (“IAR”) for an investment-advisory firm (the “Investment Firm”) whose principal place of business was Santa Barbara, California. The Investment Firm was a registered investment advisor with the Securities and Exchange Commission and as an IAR affiliated with the Investment Firm, defendant owed fiduciary duties to the Investment Firm’s clients, including the duties of loyalty and good faith. Pursuant to the agreements signed by Investment Firm clients, defendant made investment decisions for those clients, and bought and sold securities on their behalf. As part of those written agreements and in the course of dealing with his clients, defendant represented to Investment Firm clients that he was a loyal IAR and fiduciary who would act in his clients’ best interests and not put his own interests above theirs. These representations were important because, for his Investment Firm clients with discretionary accounts, including Advisory Client 1 and Advisory Client 2, defendant was able to execute transactions without the need to seek prior, transaction-specific approval. And defendant knew that his clients trusted and relied upon his loyalty. For example, Advisory Client 1 was a professional athlete, and advised defendant that he relied upon defendant to manage his wealth so that he, Advisory Client 1, could focus exclusively on his professional sports career.

 

Beginning in or around December 2017 and continuing through in or around June 2020, defendant, without authorization and in violation of the fiduciary duties he owed and representations he had made, began to convert funds within Advisory Client 1’s checking account 3 for his own unauthorized personal use and benefit. Specifically, defendant charged jewelry, Lakers tickets, electronics, and his children’s college tuition on an American Express credit card in the name of his deceased mother, and then paid the resulting debts by initiating interstate wire transfers through the Automated Clearing House network (“ACH payments”) from Advisory Client 1’s checking account to American Express. As one example of defendant’s use of the interstate wires to execute his fraudulent scheme, on January 9, 2020, defendant initiated an ACH transaction from Advisory Client 1’s account to American Express in the amount of $3,034.92. This electronic funds transaction, which travelled in interstate commerce, was typical of defendant’s method of structuring unauthorized transactions from Advisory Client 1’s account into ACH payments ranging between approximately $2,000 and $4,000 in order to avoid the scrutiny that larger payment amounts might draw.

 

When defendant learned, in or around May 2020, that representatives from Advisory Client 1’s sports agency were investigating potential irregularities involving Advisory Client 1’s accounts, defendant misrepresented to that agency that he had reviewed Advisory Client 1’s accounts and found no irregularities. In or around June 2020, when representatives from Advisory Client 1’s sports agency confronted defendant with evidence of the improper ACH payments, defendant falsely blamed Advisory Client 1’s personal assistant. After the apparent discovery of his fraud against Advisory Client 1, and to further conceal and continue his scheme, in or around June 2020, defendant ceased initiating ACH payments from Advisory Client 1’s account and, instead, initiated two additional unauthorized ACH payments from Advisory Client 2’s checking account to satisfy approximately $4,765.58 in additional debts defendant had incurred through the use of his deceased mother’s American Express credit card. Through his scheme to defraud, defendant caused losses totaling approximately $743,817.58.

 

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent Frankel’s Offer. Accordingly, it is hereby ORDERED pursuant to Section 203(f) of the Advisers Act, that Respondent Frankel be, and hereby is barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.

 

For a copy of the SEC settled order for administrative proceeding, click here.

 

In addition to regulatory disclosures above, Marc Frankel has two other disclosures, which include the following:

 

• June 2020—“Fraudulent bank activity was detected in a client’s bank account attached to a brokerage account. The Credit Card Company provided verbal information as to the cardholder. An internal investigation was initiated in conjunction with the custodian and bank to verify the information, but we could not verify in writing what the Credit Card Company stated verbally. The representative was asked in a face-to-face meeting if he was aware of the use of the card and ultimately admitted he was responsible. The internal review remains ongoing as we investigate all his clients that have bank accounts attached to them.” As a result, Marc Frankel was discharged from Partnervest Advisory Services, LLC.
• March 2013— “RESPONDENT FRANKEL FAILED TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.” As a result, the Financial Industry Regulatory Authority (FINRA) suspended Marc Frankel.

 

For a copy of Marc Frankel’s SEC AdvisorInfo, click here.

 

We Help Investors Recover Investment Losses

FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.

 

In addition, to the extent a Financial Advisor converts client assets during the course and scope of his employment and/or registration with the brokerage firm, that brokerage firm may be held liable for any attendant losses.

 

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.