Mid Atlantic Capital Corporation Fined $100,000 Over Failing to Supervise Walter Grenda, Timothy Dembski, and the Prestige Wealth Management Fund
Have you lost money with financial advisors Walter Grenda, Timothy Dembski and Reliance Financial Advisors from the Buffalo, New York area? Dembski previously agreed to be barred from the securities industry by FINRA, the Financial Industry Regulatory Authority. In a separate but related matter, Walter Grenda was also barred from the securities industry by FINRA.
In April 2017, FINRA fined Mid Atlantic Capital Corporation over its alleged failure to supervise Grenda and Dembski. FINRA alleged that Grenda and Dembski informed Mid Atlantic Capital about a hedge fund called the Prestige Wealth Management Fund. Mid Atlantic Capital was then required to supervise these transactions, but FINRA alleged that it failed to do so. To settle these allegations, Mid Atlantic Capital was ordered to pay a $100,000 fine.
Walter Grenda and Timothy Dembski and their registered investment advisory firm, Reliance Financial Advisors were previously the subject of an action by the SEC (the Securities and Exchange Commission). The SEC alleges that Grenda and Dembski solicited their investment advisory and tax preparation clients to invest in a speculative, risky hedge fund called the Prestige Wealth Management Fund.
The SEC alleges that Walter F. Grenda (of Hamburg, NY) and Timothy S. Dembski (of Lancaster, NY) made false and misleading statements to their clients and recommended that they invest in the Prestige Wealth Management Fund. Grenda’s and Dembski’s clients invested a combined $12 million in the Prestige Wealth Management Fund. The Fund started trading in April 2011, and it collapsed in December 2012, losing over 80% of its value.
In particular, the SEC alleges that Walter Grenda and Timothy Dembski made misleading statements to their clients about the hedge fund manager, Scott Stephan. Stephan had been hired by Grenda and Dembski in April 2007 to help with telemarketing, to make cold calls to potential clients, and to help arrange for seminars. Prior to being hired by Grenda and Dembski, the SEC alleges that Stephan had no professional experience in managing others’ money. Stephan previously worked as a debt collector for auto loans and had personal connections with Dembski.
Dembski and Stephan purportedly developed an “Algorithm”, which consisted of day trading ETFs. According to the SEC allegations, Dembski and Stephan had not tested this Algorithm to see how it worked prior to its actual use. The SEC alleged that Grenda and Dembski knew that the private placement memoranda misled investors about Stephan’s experience, which stated that he had over 14 years of experience and managed a portfolio of $500 million. The SEC further alleged that Grenda and Dembski misrepresented the speculative nature of the Prestige Wealth Management Fund. In addition, the SEC alleged that Grenda and Dembski had clients sell off variable annuities to invest in the fund, causing them to incur a combined $290,000 in surrender fees, in violation of their fiduciary duties as investment advisors.
As part of the investigation, the SEC alleges that Walter Grenda also borrowed $175,000 from his clients to pay for business expenses, but that he instead used them for personal expenses.
In addition to being affiliated with their registered investment advisory firm, Reliance Financial Advisors, Walter Grenda and Timothy Dembski were also affiliated with a broker-dealer in the last several years. Both Grenda and Tembski were registered representatives of Mid Atlantic Capital Corporation from September 2011 to July 2013. FINRA (the Financial Industry Regulatory Authority) has also investigated Grenda’s and Dembski’s conduct in relation to this hedge fund.
Broker-dealers like Mid Atlantic Capital Corporation have a responsibility to adequately supervise all representatives who are registered through their firm, including investments sold by their registered representatives. Broker-dealers also must take steps to ensure that their financial advisors follow all securities rules and regulations, as well as internal firm policies. When broker-dealers fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.
Our attorneys have represented hundreds of investors who have defrauded by their financial advisors or investment advisors. We have also previously represented numerous clients throughout New York.
Click to view: Mid Atlantic Capital FINRA AWC
Click to view: Dembski BrokerCheck 12.11.14
Click to view: Grenda BrokerCheck 12.11.14
Click to view: Dembski FINRA AWC
Click to view: Grenda FINRA AWC
Click to view: SEC Order
If you have lost money with Walter Grenda, Timothy Dembski, the Prestige Wealth Management Fund, Reliance Financial Advisors, or Mid Atlantic Capital Corporation and want to hear about ALL legal options, please visit https://www.israelsneuman.com or call us at 720-599-3505.
Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency. Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency. All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact. This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice. Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis. In contingent representation, clients may still be liable for costs.