On September 29, 2009, the U.S. Securities and Exchange Commission ("SEC") barred Charles B. Ganz from working as an investment advisor and further barred him being employed in any capacity by an investment advisor. Ganz was the Chairman, sole officer, and sole owner of Stratum Wealth Management, LLC. The SEC accused Ganz and Stratum of violations of willful violations of various anti-fraud provisions of Federal securities laws, including the Securities Act of 1933 the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, and the Investment Company Act of 1940.
Specifically, the SEC accused Ganz of misappropriating more than $400,000 in funds from a Stratum client's account to pay for his personal expenses. In addition, Stratum purchased bonds for two clients, at a price that Ganz knew was significantly higher than the value of the bonds, in order to transfer the investment and avoid losses for another client who threatened legal action against Stratum. Moreover, the SEC accused Stratum of sending clients misleading monthly statements that falsely implied that the current market value or fair value of restricted securities each client owned was equivalent to the market price of freely-trading stock. Stratum and Ganz also failed to disclose a material conflict of interest and that Stratum's financial condition was severely impaired. Finally, Stratum failed to maintain required books and records and failed to maintain an accurate Form ADV.
Based on the above, the SEC censured Stratum; required Stratum and Ganz to cease and desist from committing or causing any violations and any future violations of Federal securities laws; barred Ganz from association with any investment adviser or investment company; prohibited Ganz from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and ordered Ganz to pay a civil money penalty in the amount of $90,000. Stratum and Ganz consented to the issuance of the Order without admitting or denying any of the findings therein.