Texas Advisor in Trump News Glare Says Clients Don’t Care
(Changes penultimate paragraph to eliminate “theft” as an allegation made in an arbitration complaint against Butowsky.)
A publicity-seeking advisor near Dallas who was sued along with Fox News Network this week over a news report that allegedly aimed to help President Trump manage accusations of cozy ties with Russia is reaching out to clients to express his innocence.
Ed Butowsky, a former Morgan Stanley stockbroker who now runs a registered investment advisory firm, admits that he hired private investigator Rod Wheeler, who filed the defamation suit, but said the purpose was to help a family solve the 2016 murder of Seth Rich, their 27-year-old son who was a staffer at the Democratic National Committee in Washington.
He denies as “bullsh**” Wheeler’s claim filed Tuesday in federal district court in New York that Fox lied in reporting that the investigator found that Rich, not Russian hackers, leaked DNC documents aimed at derailing Hillary Clinton’s presidential campaign.
Fox has since retracted the story, and Butowsky is now playing defense with his clients.
“I have sent out a message to clients saying, ‘Guys, there’s no truth to this thing,’” Butowsky said in an interview on Wednesday, noting that many of his clients are Democrats despite his boasts on social media about having attending the President’s inauguration.“They care about their money and the job I’m doing. I’m working hard, our office is working fine, there’s no problem whatsoever and nobody really cares because they know me and they know there’s no truth to this stuff.”
The brouhaha, nevertheless, focuses renewed attention on the complex issues that can arise when advisers wade into politics and other sensitive issues, say industry veterans.
“Right now, our political system is so divisive that any advisor who gets involved or is posting things has to know they’re going to create love and hate,” said Dr. Tim Ursiny, founder of Advantage Coaching and Training in Chicago, who said he was not familiar with Butowsky’s case. “They have to go in knowing that it has ramifications.”
Butowsky, whose firm Chapwood Capital Investment Management in Plano managed $237 million in 346 accounts at the end of January 2017, according to the firm’s most recent ADV regulatory filing, has not been overtly controversial in the past but has been aggressive this year.
Wheeler’s lawsuit claimed that Butowsky shepherded him to the White House to discuss his findings with former press secretary Sean Spicer and told BuzzFeed that he was a friend of Trump adviser Steve Bannon. And in the latest headache for Butowsky, the lawsuit said that the advisor invoked Trump himself to encourage Wheeler to cooperate with a draft of the Fox News website article that the White House allegedly saw.
“Not to add any more pressure but the president just read the article,” says a May 14 text message from Butowsky to Wheeler that is reproduced on the first page of the lawsuit. “He wants the article out immediately. It’s all up to you.”
Butowsky said on Wednesday that he has never spoken with Trump and that Wheeler is simply trying to extort money from Fox News and its parent company.
The advisor has not been shy in the past about his own alleged professional accomplishments.
At Morgan Stanley, where he worked for 15 years through 2002, he was “frequently in the top 5 of teams out of 14,000 teams” and was “the first advisor to surpass one billion dollars in assets under management,” according to his LinkedIn profile, where he identifies himself as a wealth manager and an “investologist.” He was recognized as a Chairman’s and President’s Club-level producer and “twice ranked number one,” it says.
He also promotes himself as having been nominated once by Reuters as “Top Financial Advisor in the World,” a designation that the newswire does not award.
Butowsky said that some of his claims about the money managed at Morgan Stanley refer to his role as an “investment banking services representative” helping to distribute private deals and working with venture capitalists and others to manage concentrated stock positions. Dallas’ city magazine, “D,” wrote in a 2008 profile that he claimed to oversee the biggest asset base in Morgan Stanley’s history. It also said that his father was head of enforcement at the SEC.
A Morgan Stanley spokeswoman did not respond to requests for comment.
After working at Morgan Stanley Dean Witter from late 1987 to mid-2002, Butowsky did stints at Banc of America Securities and Bear, Stearns & Co. before starting Chapwood in 2007, according to BrokerCheck and regulatory filings.
Earlier this year, an arbitration panel permitted a stipulated award clearing Butowsky’s Central Registration Depository record of five customer complaints variously alleging unauthorized equities margin account trading and unsuitable product sales. The complaints, dating to 2005 and earlier, were false and/or factually erroneous, according to the arbitrators
A sixth customer complaint settled by Morgan Stanley in 2004 for $375,000 over investments in dot-com stocks remains on his record. The client has asked for some $1.4 million in compensatory damages plus some $6 million in punitive damages.
—Jed Horowitz contributed to this story.