Litigation Release No. 25656 / March 3, 2023
Securities and Exchange Commission v. Adam S. Kaplan and Daniel E. Kaplan, No. 2:23-cv-01648 (E.D.N.Y filed March 3, 2023)
The Securities and Exchange Commission today charged New York-area twin brothers, Adam Kaplan and Daniel Kaplan, for engaging in several different fraudulent activities to misappropriate more than $5 million from at least 60 of their investment advisory clients.
According to the SEC’s complaint, Defendants were associated as investment adviser representatives with an SEC-registered investment adviser from May 2018 until their termination in July 2021, and after leaving that firm, they continued to act as investment advisers to certain clients. The complaint alleges that, among other things, from at least May 2018 through July 2021, Defendants overcharged clients for advisory fees by fraudulently inflating the fee amounts in clients’ advisory agreements, without the clients’ knowledge or consent, so that they could collect higher fees than their clients had agreed to pay. The complaint also alleges that, from at least May 2018 through at least October 2022, Defendants misappropriated clients’ funds by fraudulently applying charges to their clients’ credit card and bank accounts for, among other things, purported investments or additional advisory fees to which the Defendants were not entitled. The Defendants allegedly used the clients’ funds obtained from these fraudulent activities for their personal benefit and to repay certain clients who complained about unusual account activity. The complaint also alleges that the Defendants falsified documents and made Ponzi-like payments to clients to conceal their fraudulent activities.
The SEC’s complaint, filed in the United States District Court for the Eastern District of New York, charges Adam and Daniel with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and seeks injunctions, disgorgement plus prejudgment interest, and civil penalties.
The SEC’s investigation, which is continuing, was conducted by Marlene Key-Patterson and Nick Magina, and supervised by Steven Klawans in the Chicago Regional Office. The SEC’s litigation is being led by Ariella Guardi and BeLinda Mathie.