Mass. Charges Annuities Seminar Patron with Fraudulent Advising
The Massachusetts securities division on Tuesday accused a 69-year-old man who developed futures trading software with failing to trade funds raised from clients and with failing to register as an investment adviser.
Bruce S. Horowitz “met some of his victims by attending other financial advisers’ seminar dinners” and pitching his ability to earn high returns by trading for clients on their behalf, Massachusetts Commonwealth Secretary William Galvin said in a statement released by his office on Tuesday.
Horowitz said in an interview that he never acted as an adviser, as the term is defined under commodities trading law. He also said that the customers he met at a dinner presentation for senior citizens interested in buying indexed annuities were the married couple who ran the seminar and who were interested in his system for day-trading S&P 500 E-mini futures contracts.
“They came around to tables after the presentation to pitch,” he said of the couple, whose names he declined to give and who he believes were selling Allianz annuities at the July 2014 dinner-seminar. “I told them what I did, they seemed interested…and several months later they contacted me.”
The administrative complaint seeks to ban Horowitz and his company, Massive Abundance LLC, from operating in the state and to require him to refund money he raised, any profit he made and pay an undetermined fine. It accused him of raising $15,000 from the client—two-thirds of which was an upfront fee to allegedly offset his development costs—and of never trading the additional $5,000.
The complaint said he raised a similar amount of money split the same way for a second investor in February 2015 and in January 2016 took on a third client who invested $5,000 with him and paid a $25,000 one-time upfront fee.
In a press release, Galvin said the case “highlights the needs for investors to check on persons offering investment advice, no matter how rosy the picture of anticipated returns.”
Horowitz, who in 1984 pled guilty in Long Island, New York, to attempted grand larceny over what he said was his former partner’s stealing from their motorcycle insurance agency, said there was little for investors to check.
“I never advised anybody about anything,” he said, adding that he worked with only three clients in Massachusetts who gave him trading discretion. In addition to the couple who he said complained to Galvin’s office, one was a person he met at another investment dinner for whom he conducted dozens of trades and who recently closed the account he had opened for them at a futures broker. The third is a neighbor who remains a close friend, he said.
Horowitz said he never traded the $5,000 that the couple gave him because the system signals he devised over more than 15 years using TradeStation’s Easy Language software were not able to cope with the volatile “China contagion” market in 2015.
He returned the trading capital to the couple late that year but kept the $10,000 upfront fee because he needed it to further tweak his software and deserved it as recompense for his development costs, according to Horowitz and the complaint.
The complaint from the state securities division’s enforcement section will be heard before a division hearing officer. A lawyer working on the case for the state declined comment on Horowitz’ statements.
Horowitz said on Tuesday that he needs to hire an attorney.