(Article from Registered Funds Regulatory Update, January 2022)
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A jury in the U.S. District Court for the Western District of New York found that Gregory Grenda and his firm, the Grenda Group LLC (collectively, the “Defendants”), violated the anti-fraud provisions of the Advisers Act for failing to disclose that Grenda’s father, Walter Grenda, was participating in the firm’s investment advisory process in violation of the terms of a 2015 settlement agreement with the SEC.
Pursuant to the terms of settlement agreement, Walter Grenda was prohibited from providing any investment advice for a three-year period. To comply with the settlement agreement, the elder Grenda sold the predecessor firm’s assets, office space and client list to the Grenda Group. However, Walter Grenda continued to meet with clients and provide investment advice, and even impersonated his son on phone calls with the firm’s broker-dealer. In 2018, the SEC settled with Walter Grenda and filed a civil complaint against Defendants for violations of the Advisers Act.
The SEC argued that Defendants facilitated the violations of the settlement agreement and failed to inform clients of Walter Grenda’s ban. Earlier this year, the Judge granted the SEC partial summary judgment for claims that the Defendants violated the Advisers Act by permitting Walter Grenda to work with clients after the settlement. The remaining claims proceeded to trial where a jury found that the Defendants violated the anti-fraud provisions of the Advisers Act set forth in Sections 206(1) and 206(2).
Jury Verdict, SEC v. Grenda Group, LLC, No. 1:18-cv-00954-CCR (W.D.N.Y Dec. 10, 2021).