Keith Springer hosts the Smart Money with Keith Springer radio show which is broadcast on iHeartRadio, as well as on KFBK in the greater Sacramento, California, area. The U.S. Securities and Exchange Commission recently charged Springer and the firm he owns, Springer Investment Management, Inc. dba Springer Financial Advisors (SFA) of Sacramento, with defrauding hundreds of retail clients.1
Many of the clients the perpetrator is alleged to have defrauded were retirees or nearing retirement.
SFA reported that the company had 513 accounts, with $207 million under management, primarily from individual retail investors, as of July 2019, according to the SEC complaint.2 The SEC alleges that Springer gained clients through his radio show, claiming in SFA marketing materials, including the company website, social media pages, direct mail and newsletters, that he had been selected to host the show because of his recognized industry expertise. In fact, Springer paid to host and broadcast the show according to the SEC.
On his radio show and in ads for SFA, Springer claimed that his company spent “hundreds of thousands of dollars a year” or “tens of thousands of dollars a year” on research, software and portfolio monitoring. The SEC complaint alleges this to be untrue, claiming that in reality SFA’s only evidence of this was a $3,000 a year Morningstar subscription which was actually reimbursed by a third party.
Springer and his company also profited from certain investments they recommended without disclosing these conflicts of interest to clients. On his radio shows, in meetings with clients, and on the company website Springer made it known that the company would “never receive any incentives to use an investment in our client portfolios.” The SEC claims this was misleading as “defendants had numerous undisclosed compensation arrangements that incentivized them to recommend, and direct client funds into, certain investments.”3 As an example, the SEC alleges that from January 2014 through April 2019, SFA received at least $6 million in annuity commissions and bonus payments from the sale of annuities to its advisory clients.4
Springer does currently hold a Series 65 securities license and a California insurance license, but he does not hold the special designation as a “Qualified Retirement Advisor” as he claimed on his radio show and in marketing materials. There is no license or special qualification for managing retirement assets according to the SEC.5 The SEC also is alleging that Springer took actions to deliberately hide from SFA clients his past history of disciplinary action by the New York Stock Exchange (NYSE) where he was barred for four years from membership for certain improper conduct that benefited him personally to the detriment of his clients.
Years later, in 2005, the SEC entered a cease-and-desist order and obtained relief against Springer and SFA for failing to disclose the earlier NYSE disciplinary action to clients and for misrepresentations regarding the performance of a private hedge fund SFA managed.
As part of the SEC regulations Springer and SFA were required to provide a copy of a disclosure brochure to all prospective and new clients that contained information on Springer’s disciplinary history. The SEC alleges that this disclosure was either not provided to new clients or was given to them after they engaged SFA’s services.
In addition, the SEC alleges in the complaint that SFA spent tens of thousands of dollars hiring consultants to suppress his disciplinary action history when clients searched the internet, making sure that the SEC’s 2005 Order would not appear on the first page of results when a Google search was performed.
The SEC Office of Investor Education and Advocacy issued an Investor Alert6 several years ago cautioning listeners of radio programs on investing to investigate the program and the persons associated with it before heeding any investment advice provided on a radio show.
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If you feel that you may have been a victim of securities fraud, or broker negligence please contact our Investment Fraud and Securities Fraud Law Offices serving the Greater Detroit Area and beyond. We offer consultations and are happy to talk to you about your unique case today!
1 SEC Charges Recidivist Investment Adviser with Defrauding Retirees
2,3,4,5 Complaint, U.S. Securities and Exchange Commission Case No. 2:19-cv-02559-WBS-EFB
6 Investor Alert: Investment-Related Radio Programs Used to Defraud, U.S. Securities and Exchange Commission, 9/23/2015