SEC Charges Malta-Based RIA in $75M Scheme

Lindberg directed his insurance companies to enter into investment advisory services agreements with SASL, a Malta-based investment advisor he owned, the SEC said.

In another scheme, Lindberg and Herwig funneled millions of dollars of cash to Lindberg-owned affiliates by loading the balance sheet of another SASL advisory client, Private Bankers Life & Annuity Co., ”with prohibited or sham investments,” the complaint states.

“Specifically, Lindberg and Herwig advised PBLA to purchase (a) millions of dollars of securities issued by Lindberg affiliates and (b) hundreds of millions of dollars in illiquid, sham ‘repurchase agreements’ issued by Lindberg affiliates,” the SEC said.

As an SEC-registered investment advisor, “SASL had a fiduciary duty to make full and fair disclosures of all material facts to its clients and to serve the best interests of its client at all times,” the SEC said. “As agents of SASL, Lindberg and Herwig owed the same fiduciary duty to SASL’s advisory clients.”

Osman Nawaz, chief of the Division of Enforcement’s Complex Financial Instruments Unit, said in a statement: “We allege a massive fraudulent scheme, involving unique financial structures and various complex investments, orchestrated by the defendants for their own benefit over their advisory clients’ benefit.”

The SEC’s complaint, which was filed in U.S. District Court for the Middle District of North Carolina, charges Lindberg, Herwig and Standard Advisory with violating the anti-fraud provisions of the Investment Advisers Act of 1940, and seeks disgorgement plus prejudgment interest, penalties and permanent injunctions.