- November 8, 2023
- Mutual Securities
Julie Anne Darrah (CRD#: 2102014) was a previously registered broker and investment advisor.
She entered the securities industry in 2001, and has previously worked for Wealth Enhancement Advisory Services, LLC; Vivid Financial Management, Inc.; Mutual Securities, Inc.; and National Planning Corporation.
Allegations of Misconduct
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in October 2023, the U.S. District Court for the Central District of California Western Division issued this 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 Anne Darrah has been the subject of one other disclosure:
- September 2023—“ 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.” Julie Anne Darrah was discharged from Wealth Enhancement Advisory Services.
For a copy of Julie Anne Darrah’s FINRA BrokerCheck, click here.
We Help Investors Recover Investment Losses
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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 firstname.lastname@example.org.