SEC v. Mark F. Spangler and The Spangler Group, Inc., Case No. 2:12-cv-00856 (D. Wash.). On May 17, 2012, the SEC announced that it filed an action against Mark Spangler, a former chairman of the National Association of Personal Financial Advisors. The U.S. Attorney’s Office for the Western District of Washington also announced parallel criminal charges against Spangler. The SEC alleges that in 1998, Spangler formed and managed a number of private funds that he marketed to clients who expected that their money would be invested in public debt and equity securities. Spangler raised more than $56 million from his clients. Starting in 2003, Spangler and his advisory firm The Spangler Group (TSG) secretly diverted client money into two private technology companies he created and in which he had significant interests. One company received almost $42 million before ceasing operations because it had always been a cash-poor company with a history of net losses. In addition, Spangler did not tell investors that TSG collected fees for “financial and operational support” from these companies, which were essentially paying these fees with the client money they had received from the funds. As a result, Spangler and his firm received $830,000 from the companies in addition to management fees that TSG received from clients. Spangler kept his fraud hidden until he placed TSG and the funds he managed into state court receivership in 2011. Spangler is charged with violating Sections 206(1) and (2), 204(4) and 207 of the Investment Advisers Act and Rule 206(4)-8 thereunder and Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder.
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