La Jolla investment fund manager George “Cody” Price, former host of KFMB radio’s “Wealth Weekend Hour,” has been charged with four counts of securities fraud by the Securities and Exchange Commission.
Among other things, the SEC charged that Price:
* falsely implied his investments were safer and would generate more money than they did;
* misled clients about his background in the securities industry; and,
* improperly took nearly $600,000 of fund assets as management fees for himself, his wife and his brothers.
But Price’s attorney said he was confident he would be able to present “ample evidence” that would rebut the SEC’s charges.
“There have been no customer complaints. Nobody has lost any money. The clients have been paid according to their agreements, with no accusations otherwise,” said Mark Chester, partner with the firm of Chester & Shine in Scottsdale, Ariz.
Price, 34, who launched his ABS Manager firm in La Jolla in 2009, currently has $19 million in assets under management, according to the SEC, although the company’s promotional materials claim assets of as much as $72 million.
One of Price’s websites boasts that his funds provide investors with “consistent monthly performance, real customer satisfaction, and actual ‘Peace of Mind.’”
Price has authored a number of online investment advice columns and hosted the "Wealth Weekend Hour" from November 2010 through January 2011.
The SEC charges that Price told investors the funds under his management -- stocked with “very safe,” “very secure” government bonds -- were generating returns of between 12 and 18 percent.
But the agency charges the funds were actually invested in high-risk, mortgage-related securities that generated returns of less than 3 percent or less. One of the funds, it said, had losses of 2 percent.
Because the funds’ performance did not match up to Price’s claims, Price and his relatives were not entitled to any management fees, the agency charges.
Chester said Price’s prospectuses to clients were carefully prepared by securities attorneys abiding by SEC regulations.
“The disclosures about the securities (in the funds) and the risks that were involved were crystal clear,” he said. “The disclosures on how the returns will be calculated and what the returns would be based on were also crystal clear.”
The SEC, which began its investigation last May, filed its charges on Feb. 8 and immediately sought a temporary restraining order to freeze the funds’ assets. But U.S. District Judge Gonzalo Curiel denied the request.
“I understand that occasionally, people in these cases take the money, get onto planes and fly away,” Chester said. “The difference here is that this money is all in a brokerage account, meaning that (the defendants) are unable to do what the SEC claims they might do.”
Chester said he felt blindsided by the SEC’s suit, since Price had been cooperating with the agency’s investigation over the past nine months, complying with all subpoenas for documents and financial records.
The SEC has since filed for a hearing on a preliminary injunction on March 1, warning that Price’s lender has said it may pull back its financing of the funds.