The U.S. Securities and Exchange Commission accused money manager Charles P. Hanlon and his Southern California investment advisory firm of fraud, alleging they claimed to manage more than $1 billion in assets when the real amount was as low as $9 million.
Hanlon, president of Delta Global Advisors Inc., was charged by the agency Thursday with inflating assets, making false statements and failing to disclose material information to existing and prospective investors.
Hanlon could not be reached for comment.
"As a result of these misleading statements and omissions," the SEC complaint said, "Delta appeared to be operationally sound and much larger and more established than it really was."
As of 2009 the Huntington Beach firm was advising 209 accounts belonging to individuals, pension plans, profit sharing plans, trusts and corporations, the complaint said.
Delta said in filings from 2006 to 2008 that it was advising a registered investment company, according to the SEC, making it eligible to register with the agency. That claim was false, the SEC said.
From 2007 through 2008, Delta's filings indicated that it was managing $656 million to $1.49 billion, according to the SEC. The actual amount rarely exceeded $25 million and was as low as $9 million, the agency said in a court filing.
The SEC also alleged that after Hanlon told the agency he would notify clients of the firm's precarious financial condition, including minimal liquid assets and overdue bills, investors remained in the dark.
Hanlon also failed to satisfy a $353,706 court judgment from June, stemming from a breach of fiduciary duty lawsuit brought by a client, the SEC said. He was disciplined the same month by the Financial Industry Regulatory Authority after failing to pay $277,790 in fees from a complaint alleging breach of contract, slander and fraud.
But Delta kept both issues under wraps from clients, according to the agency.