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The Securities Law Firm of KlaymanToskes announced today that it is investigating claims on behalf of former customers of Clinton D. Fraley (“Fraley”) and MML Investors Services, LLC, Northwestern Mutual Investment Services, LLC or Wealth By Design, Inc. Earlier this month, the Colorado Securities Commissioner filed an emergency law enforcement action to enjoin Clinton Fraley and Wealth By Design from violating the Colorado Securities Act (“the Act”), by gaining unauthorized access to investors’ mutual fund accounts, illegally converting the investors’ securities into cash, then forging checks to gain access to the funds for his own personal use. A copy of the Complaint can be found by clicking here.
Colorado said that “Fraley, who was a licensed securities professional employed with licensed broker-dealers until he was terminated in 2011, solicited hundreds of thousands of dollars from Colorado investors, promising the investors that their money would be invested in “a well balanced portfolio of investments” consisting of Roth IRAs, traditional investments such as stocks and bonds, mutual funds and non-qualified investments.” Contrary to his representations, Colorado said, “Fraley gained unauthorized access to the investors’ accounts, forged the investors’ signatures on checks, deposited the money in a Wealth bank account and converted the money for his own personal benefit, including the purchase of a house. Colorado alleged that Fraley’s and Wealth’s conduct violates the anti-fraud provisions of the Colorado Securities Act.”
From March 2007 to May 2011, Fraley was registered with Northwestern Mutual Investment Services, a broker-dealer registered with the Financial Industry Regulatory Authority. Thereafter, from May 2011 to October 2011, Fraley was registered with MML Investors Services, also a FINRA registered broker-dealer. Under FINRA Rules, Northwestern Mutual Investment Services and MML Investors Services were obligated to properly supervise the activities of Fraley during the time he was registered with these brokerages. Accordingly, these firms may be liable for failing to supervise Fraley’s activities while registered at these firms, and could potentially be responsible for compensating customers of Fraley for their losses.