South Florida Arbitration & Litigation Lawyer Blog
In the Matter of Jason A. D’Amato
September, 2012:
The Securities and Exchange Commission recently announced the issuance of an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940, and Notice of Hearing. In the Order, the Division of Enforcement alleges that Jason A. D’Amato, the former President and Senior Investment Officer of Stanford Capital Management, LLC (SCM), an investment adviser registered with the Commission from September 2006 through September 2009, misrepresented to investors and prospective investors the performance of a proprietary mutual fund wrap product known as Stanford Allocation Strategies (SAS). D’Amato, the portfolio manager for the SAS program, created and used personalized proposals in one-on-one presentations to prospective clients (Pitchbooks) that contained charts showing the annual performance of SAS strategies dating back to 2000. Pitchbooks created after May 2007, however, were materially misleading because they combined – under the heading “historical performance” – hypothetical, backtested data for 2000 to 2004 with audited, composite data for 2005 to 2008, without an appropriate explanation of the differences in the way the data was calculated and presented. D’Amato failed to disclose these facts to clients, prospective clients, and Stanford Group Company (SGC) financial advisers (FAs). Additionally, from at least February 2005 through the Fall of 2008, D’Amato actively misrepresented his credentials to clients, prospective clients, and SGC FAs, holding himself out as a Chartered Financial Analyst (CFA) when, in fact, he had never been a CFA charterholder. To perpetuate this lie, D’Amato fabricated an e-mail, purporting to be sent by the CFA Institute, that congratulated him on passing the Level III CFA exam and achieving CFA charterholder status. Thereafter, D’Amato used the CFA acronym next to his name on his business cards, in his e-mail signature block, and in copies of his biography that were passed along to clients, prospective clients, and SGC FAs. Based on D’Amato’s misrepresentations about his qualifications, SCM and SGC also actively promoted D’Amato as a CFA charterholder.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide D’Amato with an opportunity to respond to these allegations, and to determine what sanctions, if any, are necessary and appropriate in the public interest. The Order directs the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of the Order on D’Amato. (Rel. 34-67773; File No. 3-15004)
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