The Financial Industry Regulatory Authority suspended William Michael Jordan of Laguna Hills, California and formerly of Securities Equity Group (SEG), fining him $21,300, including disgorgement of $6,300 in commissions, for allegedly soliciting and selling A&O Capital Appreciation Bonds to multiple investors without conducting adequate due diligence regarding the bonds' associated company, A&O Resource Management, Ltd, whose registered principals, unbeknownst to Jordan, misappropriated investor funds.
Because of the misappropriation of funds, the investors whom Jordan sold these bonds to completely lost their combined $90,000 investment.
FINRA's findings state that in December of 2006, Jordan approached and recommended A&O bonds to four investors, receiving a total of $6,300 in commission while failing to adequately research A&O and failing to obtain approval for the sales from his employing firm SEG.
FINRA found that in December 2006, A&O principals began transferring $37 million in customer funds to a slush fund bank account, using the misappropriated funds for business and payroll expenditures as well as personal expenses.
By 2009, the $37 million fund dried up and A&O filed for Chapter 11 bankruptcy protection while an appointed Bankruptcy Trustee filed a complaint in 2010, alleging fraud and breach of fiduciary duty against A&O, who had marketed their products as insurance even though they were actually securities.
Due to A&O's misconduct and bankruptcy, all four of Jordan's investors lost their entire investments. According to FINRA, Jordan had "lacked a reasonable basis to recommend the purchase of A&O Capital," furthermore failing to calculate various measures related to A&O's bonds, which were backed by a pool of underlying life insurance policies and reinsured with Provident Capital Indemnity, Ltd. of Costa Rica.
The investigation concluded that Jordan "did not adequately understand the conditions of the investment or its relative risks and rewards."
If you have invested with William Michael Jordan or with another broker or firm who has advised or sold a product you suspect was not adequately researched by the firm or the broker and this failure to conduct appropriate due diligence has had an adverse impact on your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.