The SEC filed a federal court lawsuit in northern Ohio last week against two former brokers of World Group Securities (WGS), the Georgia-based broker-dealer affiliate of the financial services firm, World Financial Group. The SEC's Complaint alleges that former WGS brokers David L. Olson and Edward A. Allen raised nearly $15 million from at least 100 investors, many of whom were customers of WGS, through the offer and sale of illegal promissory notes which turned out to be a "ponzi scheme."
Specifically, the Complaint alleges that Allen and Olson recruited promissory notes investors from customers of WGS. They solicited WGS customers to invest in the promissory note scheme while the brokers were working at WGS and after they left. According to the Complaint, even after they left the firm, they created the impression that they were still affiliated with WGS. The Complaint further alleges that many investors thought the promissory note offerings were affiliated with WGS, and as a result, the investors were more confident in the legitimacy of the promissory note investments. The SEC action seeks injunctive relief and disgorgement of profits against Olsen and Allen.
The victims of the promissory note scheme live primarily in Ohio and Florida. The Columbus, Ohio-based Meyer Wilson currently represents more than 40 investors who suffered millions of dollars in losses in this investment scam. The firm is pursuing claims against World Group Securities in arbitration proceedings before the Financial Regulatory Industry (FINRA) on behalf of its clients, asserting claims that the brokerage firm utterly failed in its obligations to supervise its agents, including Olsen and Allen.
The SEC's Complaint filed May 21, 2010, can be found here.