By George Miller of Shustak Reynolds & Partners, P.C. posted on Tuesday, January 3, 2012.

Investment Placement Group (IPG), an independent brokerage firm headquartered in downtown San Diego, agreed in late December to pay the Securities and Exchange Commission (SEC) approximately $4 million in penalties to settle charges that the firm failed to supervise Aurelio Rodriguez, one of its former registered representatives.

As described in the SEC’s December 2011 Order, “[f]rom approximately January through November 2008 (“relevant period”), while Rodriguez was associated with IPG, he perpetrated a fraudulent interpositioning scheme involving a Mexican investment adviser, InvesTrust, and utilizing a separate Mexican brokerage firm. Rodriguez, acting in concert with InvesTrust, violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by needlessly interposing the Mexican brokerage firm into securities transactions between IPG and InvesTrust’s institutional clients, including four Mexican pension funds. As a result of Rodriguez’s misconduct, the pension funds paid approximately $65 million more for certain credit-linked notes than they would have had the Mexican brokerage firm not been unnecessarily interposed as a “middleman.” IPG and Rodriguez each received more than $6 million as a result of Rodriguez’s fraudulent scheme.”

IPG neither admitted nor denied the SEC’s allegations but agreed to pay more than $4 million in penalties to settle the charges. The firm also agreed to revise its policies, procedures and systems governing the detection and prevention of interpositioning violations and other fraudulent activity.

If you believe you have been damaged as a result of a broker dealer’s failure to supervise or negligent supervision of its registered representatives, please contact our firm’s managing partner, Erwin Shustak, at 888-748-8748 or [email protected].

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