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Investment adviser barred

By   /   Friday, June 19th, 2009  /   Comments Off on Investment adviser barred

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The owner of a San Luis Obispo investment firm has been barred from acting as an investment adviser by the U.S. Securities and Exchange Commission for allegedly steering clients to a shell fund that paid him kickback fees.

On May 15, the SEC ordered that Jeffrey Forrest, principal of San Luis Obispo-based WealthWise, “is barred from association with any broker, dealer, or investment adviser,” according to the commission’s administrative ruling. The commission said Forrest can reapply to become an investment adviser after five years.

The commission’s complaint alleged that from April 2005 to October 2006, Forrest recommended that more than 60 WealthWise clients invest $40 million in Apex Equity Options Fund, a hedge fund managed by Thompson Consulting in Salt Lake City.

But Forrest failed to disclose a side agreement that he had to receive a kickback from Thompson Consulting for money invested in Apex. The SEC said 90 percent of Apex’s assets came from WealthWise.

WealthWise received almost $400,000 in performance fees for its work. Apex collapsed in August 2007 “as a result of [Thompson Consulting’s] risky trading strategy, and WealthWise clients lost almost their entire investments,” the SEC’s decision reads.

From April 2005 through September 2007, the time Forrest guided investors to Apex, WealthWise had $80 million in assets under management, the SEC said.

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