17 Defrauded Clients to Get Seized Assets From Wymer : Securities: About $4 million will be distributed, including $280,000 to Orange, regulators say. City hopes to fully recover the $7.2 million it lost from Newport investment adviser.

About $4 million in assets seized from former Newport Beach investment adviser Steven D. Wymer will be distributed among 17 of his defrauded clients, securities regulators announced Tuesday.

The Securities and Exchange Commission said the money was ordered distributed by U.S. District Judge Robert J. Kelleher on Monday.

The SEC had sued Wymer in December, 1991, accusing him of orchestrating a vast fraud through the investment companies he controlled, Institutional Treasury Management Inc. and its predecessor, Denman & Co.

Wymer had promised cities and public agencies that he could safely invest their extra cash at high rates of return.

It was not immediately known how much each of the clients would receive. The city of Orange, for example, will receive about $280,000 as a result of Monday’s decision, according to City Atty. Robert O. Franks. The city lost $7.2 million three years ago because of Wymer, who served as a financial consultant to the city.

Orange has six other legal actions pending in connection with the Wymer fraud case, said Franks.

“Our goal is a full recovery of losses,” said Franks. “Hopefully, there will be more down the line.”

James Riddet, one of Wymer’s attorneys, said Wymer had agreed to forfeit about $9 million in assets and he assumed that the $4 million was just the first installment of money to be distributed.

“Whatever money was realized is supposed to go to the victims,” Riddet said. “Whatever has been liquidated would be turned over.”

Wymer had agreed to a judgment ordering him to pay $209 million in restitution to his defrauded clients and to disgorge virtually all his possessions, which included numerous cars and fancy homes.

In a related federal criminal action, he pleaded guilty in Los Angeles to nine felony counts of racketeering, securities fraud, mail fraud, bank fraud and obstructing justice. He was sentenced to 14 years and seven months in prison.

The case has led to demands for better regulation of investment advisers.

Last month, the SEC proposed new rules that would provide more and better information to investors who pay for the services of professional financial advisers. The rules affect 21,000 individuals and firms offering investment advice to the public.

Such advisers now have more than $9 trillion in assets under management.

One proposed rule would require investment advisers, also known as financial planners, to provide advice only if it is suitable for the particular needs, experience and objectives of each investor.

The second rule would ensure that customers who give discretionary investment authority to their advisers will also get account statements from a third party custodian who actually holds the customer’s assets.

SEC Chairman Arthur Levitt Jr. has noted that Wymer was able to conceal the fraud because his clients did not receive copies of their statements directly from custodians. “He was able to send completely fabricated statements,” Levitt said.