Coastal Investment Advisors Inc. has settled charges with regulators over the company's failure to supervise its former president, who was sentenced to jail in 2016 for stealing from clients.
The Securities and Exchange Commission charged Michael Donnelly, the investment advisory's former president, with defrauding investors by using their funds to pay for personal expenses and hiding the scheme by providing them with false account statements and trade confirmations. Donnelly admitted to the crimes when he and the company consented to the SEC's order in 2015, and a federal court sentenced him the next year.
The SEC's latest action alleges that Coastal Investment Advisors and its broker/dealer Coastal Equities Inc. lacked policies governing the creation and use of the reports that Donnelly used to fool his clients.
Without admitting to or denying the SEC's findings, the companies each agreed to a censure and to pay a $40,000 civil penalty.
