Firm that sold notes tied to $287 million fraud withdraws investment adviser license in Colorado
DENVER (Feb. 13, 2019) - The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), announced today that Pinnacle Wealth Management, LLC (also known as Pinnacle Plus Wealth Management, Pinnacle Plus Capital, and Pinnacle Plus Private Placement) along with Matthew L. Walker, Jeffry C. Tupper, and Kenneth B. Riewerts, have withdrawn their licenses to conduct investment adviser business in the state of Colorado.
This action is a result of findings made during a routine Division examination of the firm in January 2018, where it was discovered that the Respondents had offered and sold unregistered securities in the form of promissory notes for 1 Global Capital, LLC. 1 Global Capital was investigated by the U.S. Securities and Exchange Commission, which filed a civil enforcement action in August 2018 against the company after alleging that Global fraudulently raised more than $287 million from over 3,400 investors nationwide. Pinnacle staff received transaction-based compensation from Global, but neither the firm nor the representatives soliciting these notes were registered to do so in the state of Colorado.
Examiners with the Division concluded and alleged that Pinnacle failed to conduct an adequate amount of due diligence in researching the Global notes, and did not understand or relay the high-risk nature of these notes to investors. As a result, investors were sold unsuitable investment products.
“Advisers are held in a trusted position by investors to keep the best interest of their clients in mind when recommending securities,” stated Securities Commissioner Chris Myklebust. “When individuals and firms breach that trust by failing to do adequate research concerning an offering, the investors are the first to suffer the consequences, but it also threatens the reputation of the good actors in the industry.”
As part of an agreement with the Division, the Respondents neither admit nor deny the allegations contained in the stipulation for entry of consent order. However, following this withdrawal both the firm and the named respondents will no longer be able to advise clients on any investment-related matters unless they are granted licensure by the state of Colorado at some point in the future. The Division has made it clear through an order signed by Commissioner Myklebust that any such reinstatement will not occur until and unless full restitution is made by the firm, Tupper, and Walker to the investment advisory clients affected by their recent actions in violation of the Colorado Securities Act.