‘Bada Bing’ Broker Parthemer Fined $160,000, Former Partner Barred
The Securities and Exchange Commission has ordered barred broker Aaron Parthemer to pay a civil penalty of $160,000 for fraudulently inducing many of his pro-athlete clients to invest in a company without permission of the wirehouses he worked.
It also imposed a three-year bar on Sylvester King, his former partner, over the fraud related to their raising $5 million from some of their approximately 40 clients, for Global Village Concerns, a now-defunct branding company that was paying them for the fund-raising. King was also ordered to pay an $80,000 penalty.
The civil penalties imposed on Wednesday follow the SEC’s imposition of a securities-industry bar on Parthemer in March, at which time it said civil penalties would follow for him and King. He had previously agreed to a Finra-imposed bar tied to violations involving the GVC investments and his role as an owner of Club Play, a Miami nightspot.
King’s brokerage license was revoked by Finra in July 2015 when he failed to pay his $35,000 fine.
Their saga has drawn attention because of the celebrity of their clients and the former brokers’ flaunting of that celebrity. Both “actively marketed” their status as National Football League Players Association-registered advisors on business cards, email signatures and other materials used in prospecting for new clients, the SEC said. Parthemer continued to use the designation after his NFLPA registration lapsed in 2012, the SEC said.
Parthemer and King misled the investors, who were current or former pro athletes, about the value of their GVC holdings and failed to disclose to them their ties to the company, the SEC said. They also caused Morgan Stanley and Wells Fargo Advisors, their employers during the 2009-2012 investing period, to violate record-keeping rules because of their concealed fund-raising activities, the SEC said.
James Sallah, Parthemer and King’s Boca Raton-based lawyer in the SEC cases, declined to comment. The former brokers, each of whom are 44 and both of whom have filed for bankruptcy, according to the SEC orders, could not be reached for comment.
King will be allowed to reapply to the SEC to re-enter the securities industry in three years, according to the decision.
Parthemer and King were ordered to pay their fines within 35 days of a lifting of a stay on their Chapter 11 bankruptcy cases or on termination of the stays, whichever comes first, according to the SEC decisions.
Parthemer and King moved from to Wells Fargo in 2011, after five years at Morgan Stanley and predecessor firm Smith Barney, and misrepresented the value of clients’ GVC investments during the transition. In one instance cited by the SEC, they told a client that his $200,000 investment was worth $2 million at the time of the move.
A spokeswoman at Wells Fargo Advisors, which permitted both brokers to “resign” in April 2015, noted that regulators have not made any allegations of wrongdoing against the brokerage firm in the cases. Wells Fargo has pending an arbitration claim seeking reimbursement of $2.1 million in bonuses from Parthemer.
A Morgan Stanley spokesperson declined to comment but noted the use of personal email was a violation of firm policy.
In May, Finra arbitrators ordered Morgan Stanley to pay former National Basketball Association point guard Keyon Dooling and NFL offensive tackle John St. Clair $819,300 related to their failure to supervise Parthemer regarding and his outside investment activities.
In July 2016, former pro bowler Asante Samuels and Mega-Millions lottery winner James Groves filed a joint claim for $7.8 million in damages against Morgan Stanley and Wells Fargo. That claim is pending, according to Parthemer’s BrokerCheck record.
Parthemer and King each have accumulated six additional customer complaints since their termination from Wells Fargo, according to the database. Two have resulted in arbitration awards, three have settled and another remains pending.