The SEC has charged a prominent San Diego-based financial advisor with fraud, accusing him and his firm of failing to disclose to clients a conflict of interest in an investment and lying to and misleading clients about a hedge fund he manages. Kevin O’Rourke, the suit’s target, is the founder and president of Western Pacific Capital Management in Del Mar, Calif. He was named a top wealth manager by San Diego magazine in 2008 and 2010.
The SEC suit alleges that O’Rourke urged his clients to invest in a non-public stock offering by another San Diego company called Ameranth. What he didn’t tell them is that his firm received 10% “success bonuses” for all the investments it brought in, the SEC claims. Ameranth is described in the SEC suit as a software provider to the hospitality, financial services and health care industries.
From 2005 to 2006, the suit alleges that Western Pacific earned $482,745 in success fees for raising $4,827,445 for the offering. The SEC further claims that O’Rourke was not registered as a broker-dealer when he was selling the shares.
The U.S. Securities and Exchange Commission (SEC) is a federal agency responsible for regulating the securities markets and protecting investors. Established in 1934 following the stock market crash of 1929, the SEC enforces laws related to securities, oversees the registration of public companies, and ensures transparency in financial reporting. The agency’s mission includes maintaining fair, orderly, and efficient markets, as well as facilitating capital formation. The SEC also plays a critical role in investigating and prosecuting securities fraud, insider trading, and other financial misconduct. Its regulatory framework helps to instill confidence in the financial markets.