The Certified Financial Planner Board of Standards (CFP) said on Monday it made the decision in response to the Securities and Exchange Commission (SEC) court order in June freezing the assets of Ash Narayan, an investment adviser who worked for Dallas-based RGT Capital Management.
The SEC accused Narayan of transferring more than $33m from clients’ accounts to a struggling online sports and entertainment ticket business called The Ticket Reserve (TTR).
Narayan failed to disclose he was a member of TTR’s board, owned its stock and received $2m in finder’s fees for the investments, according to the SEC’s complaint.
The SEC added that TTR made Ponzi-like payments to existing investors using money from new investors.
“These investments were unsuitable, contrary to the clients’ stated and agreed objectives and sometimes without the clients’ knowledge and consent,” the CFP Board said in a statement.
Narayan’s right to use the CFP certification is suspended until it has completed its investigation and possible further disciplinary proceedings, it added.
The professional body said that Narayan also falsely told clients that he was a certified public accountant, when in fact he was not.
While appearing before the CFP’s disciplinary board, Narayan failed to prove that “he did not pose an immediate threat to the public or that his conduct did not significantly hurt the reputation” of the organisation, according to the statement.
Roy Oswalt fraud
One of the victims of Narayan’s scam was major league baseball player Roy Oswalt, who originally agreed to invest $200,000 in TTR, but then ended up losing $7m.
In a declaration made to the court, Oswalt said Narayan had not told him that he was receiving funds for directing investments into TTR, had not disclosed he was on TTR board of directors and had not mentioned he owned millions of shares in TTR.
Narayan also failed to tell Oswalt that TTR was in a poor financial condition or that TTR’s auditors had expressed concern about the company’s ability to stay in business.
The SEC also charged TTR’s chief executive Richard Harmon, and its chief operating officer John Kaptrosky with participating in the fraud.
“Harmon and Kaptrosky approved and executed Ponzi-like payments, falsified and backdated documents, and created sham promissory notes between The Ticket Reserve and Narayan in attempts to further conceal the scheme,” the SEC said in a statement in June.
