BROKERS SOLD $8 MILLION IN SHAM OIL SHARES, HID SALES ON PERSONAL PHONES!

SEC v. Arete Wealth Management LLC, Arete Wealth Advisors LLC, Joey Miller, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26228, dated January 17, 2025.

The SEC charged Arete Wealth Management, its affiliated advisory firm, their Chief Compliance Officer, and several representatives for their roles in an illegal securities offering and subsequent cover-up. Representatives allegedly sold over $8 million in unregistered Zona Energy shares to clients without approval, engaging in "selling away" and misleading investors. The compliance officer and firm allegedly facilitated a cover-up by obtaining liability waivers containing false statements.

In Plain English

Some financial professionals secretly sold investments in a company called Zona Energy to their clients, even though their own company hadn't approved it. They hid these sales and misled clients, causing over $8 million in losses. Later, they tried to get clients to sign papers that wrongly suggested the clients had no complaints, which also misled them. The company's compliance chief was involved in this cover-up.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Unapproved Sales Begin From approximately October 2018 to May 2020, representatives Joey Miller, Jeff Larson, and Randy Larson, who were registered with Arete Wealth Management and Arete Wealth Advisors, began selling shares of Zona Energy, Inc. to their clients. These sales were not approved by Arete and were conducted without its compliance oversight, a practice known as 'selling away'.
2. Fraudulent Inducements Miller and Jeff Larson made false and misleading statements to prospective Zona investors. In exchange for their fundraising efforts, Richard Dale Sterritt, Jr., a control person at Zona, provided them with deeply discounted Zona shares.
3. Hiding the Sales To conceal these unauthorized sales from their employer, Miller, Jeff Larson, and Randy Larson communicated with investors and Sterritt using personal phones and email accounts, bypassing Arete's surveillance systems.
4. Cover-up Attempt After Arete management and Chief Compliance Officer UnBo (Bob) Chung became aware that clients had invested in Zona, they instructed the three representatives to obtain settlement agreements from clients. These agreements were intended to release Arete entities and management from liability related to the Zona investments.
5. Misleading Waivers More than 100 Arete clients ultimately signed these settlement agreements. The complaint alleges that these waivers contained false and misleading statements and an illegal broad liability disclaimer, which could have led clients to believe they had waived non-waivable causes of action, further victimizing them.
6. Unregistered Broker-Dealer Activity Separately, Michael Sealy acted as an unregistered broker-dealer while attempting to sell Zona shares, violating Section 15(a)(1) of the Securities Exchange Act of 1934.

The Enforcement Action

The SEC charged Arete Wealth Management LLC, Arete Wealth Advisors LLC, Joey Miller, Jeff Larson, Randy Larson, and UnBo (Bob) Chung. The SEC alleges that Miller, Jeff Larson, and Randy Larson engaged in 'selling away' by selling over $8 million in Zona Energy shares to clients without firm approval and misled investors. Chung and Arete allegedly orchestrated a cover-up by obtaining liability waivers from over 100 clients that contained false statements and illegal disclaimers. Michael Sealy settled charges for acting as an unregistered broker-dealer in connection with Zona share sales, agreeing to a $200,000 penalty, a 12-month penny stock bar, and a cease-and-desist order. The SEC seeks permanent injunctions, civil penalties, conduct-based injunctions, penny stock bars, and officer and director bars against the remaining defendants.

Named in this action: Arete Wealth Management LLC, Arete Wealth Advisors LLC, Joey Miller, Jeff Larson, Randy Larson, UnBo (Bob) Chung.

Original SEC litigation release ↗ · Browse all cases