Seattle Firm Charged With Fraud By SEC

The U.S. Securities and Exchange Commission (SEC) has issued Litigation Release No. 22087 indicating it has charged Seattle broker Richard A. Finger, Jr. and his firm, Black Diamond Securities LLC, with securities fraud. Simultaneously, an order was requested from the federal court in Seattle to freeze all assets of each.

Black Diamond Securities LLC began operating in February 2011, where Finger was managing assets of around $5 million. According to the SEC filings, the majority of his clients were friends and family members, who lost millions in a short time span due to risky options trading and massive commissions. Often, the excessive commissions were hidden from customers and fake account statements covered up his wrongdoings.

Finger went on a rampage trading high risk options on a regular basis costing his investors $2 million in a short time frame. During the same time period, Finger and his firm were charging over $2 million in commissions for losing money. This activity was likewise concealed by providing false monthly account statements.

Just as in virtually every other scam, a vast majority of the investors’ money was used to support a lifestyle of luxury consisting of a $2 million house and fancy cars, among other things.

The SEC charges were filed in federal district court for the Western District of Washington. Finger and Black Diamond are charged with violation of the Securities Exchange Act of 1934, Rules 10b and 10b-5. Black Diamond is also charged with violation of the Securities Exchange Act of 1934, Section 15(c)(1)(A), aiding and abetting. The SEC is seeking an asset freeze, permanent injunctions, accounting, disgorgement, prejudgment interest and fines.

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