“Nobody knows what’s happening internally in these pooled funds at the retail level. How are these firms really managing these types of funds? It’s a recipe for disaster,” Scott said.
Lufkin Advisors managed $115.8 million in client assets and operated three pooled investment vehicles, as reported in their latest Form ADV. These pooled funds, which combine capital from multiple investors, have raised concerns among some financial professionals regarding their suitability for retail investors. The primary issue stems from the potential difficulty in tracking and accounting for individual contributions within these collective investment structures.
In the complaint, the SEC stated that both Lufkin and Lufkin Advisors “engaged in a fraudulent course of conduct that included a loss of control of crypto assets entrusted to them for at least one year without disclosure of that fact to advisory clients, multiple investments with Mr. Lufkin’s spouse’s employer without proper disclosure to private fund investors, and failure to properly account for withdrawals from the private funds.”
The complaint further stated that both Lufkin and Lufkin Advisors monitored the private funds’ investment value. They did not exercise care of the client’s assets, and failed to follow the rules and statutes that govern RIA’s. This includes custody of the assets, maintenance of the advisor records as required, and filing the required associated reports with the SEC.
Lufkin agreed to the SEC’s sanctions without admitting or denying the allegations. He was unavailable for comment.
FINRA stated earlier this year that it is adding concerns regarding “crypto assets” to its list of key interests impacting brokers and broker dealers. In its “2024 FINRA Annual Regulatory Oversight Report,” FINRA said it was monitoring brokers and financial advisors engaged in involved in sales and marketing of digital assets.
SEC Conflict Of Interests
Real Estate and other funds can have complex structures that allow the general partner to withdraw money for costs associated with the fund. We have seen a rise in cases against fund managers and others who have abused this structure to take excessive payments through salaries, improper costs, comingling of assets, inside deals riddled with conflict of interests were assets are traded between related parties to create the illusion of profits and other misconduct. These schemes harm investors and frequently lead to large losses in the fund. Investors may have claims against the funds, directors and officers for breach of fiduciary duty, fraud or other claims. In certain circumstances, the fraud can be reported to the SEC whistleblower office for investigation by the SEC.
Did You Invest With Lufkin Advisors?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.