The Securities and Exchange Commission (“SEC”) charged two former Florida brokers, Fabrizio Neves and Jose Luna, who were employed by now-defunct FINRA member LatAm Investments, LLC (“LatAm”), with overcharging customers approximately $36 million. In addition, the SEC charged LatAm’s former president, Angelica Aguilera, with failing to adequately supervise the pair, allowing them to carry out the allegedly fraudulent markup scheme undetected.
According to the SEC, Neves and Luna defrauded two Brazilian public pension plans and a Colombian institutional investor by charging illegal markups in connection with 12 structured notes issued by major commercial banks in the U.S. and Europe. The SEC alleged that Neves and Luna concealed the illegal markups by altering the structured notes’ term sheets to reflect the markup amounts as the actual price, and then sent the forged term sheets to their customers.
The SEC claims that the pair sold the structured notes with undisclosed markups of as much as 67 percent. According to the SEC, the Brazilian public pension plans were charged approximately $24 million and the Colombian institutional investor was charged approximately $12 million in illegal markups between 2006 and 2009.
The SEC alleges that Neves received millions of dollars in inflated sales commissions and Luna received hundreds of thousands of dollars in inflated salary and commissions from the structured note transactions. The SEC’s complaint seeks the return of their ill-gotten gains, the assessment of financial penalties, and an injunction against further violations of the federal securities laws.