A former investment adviser from Monsey has agreed to pay the U.S. Securities and Exchange Commission nearly $2.5 million for defrauding clients.
David B. Bodner, 66, engaged in a series of “conflicted transactions,” according to a Feb. 2 SEC cease-and-desist order, and failed to disclose to clients his conflicts of interest, a criminal record and previous regulatory sanctions.
His schemes enabled him to use client funds to shore up his own business interests and avoid loan defaults, the SEC says, and in some instances to use the clients’ own funds to pay back client loans.
Bodner co-owned several entities known as the Beechwood investment advisory services and reinsurance businesses. At the same time, according to the SEC, he was a principal in hedge funds known as the Platinum Partners entities.
By 2013, Beechwood was managing almost $2 billion in insurance company assets.
But Bodner, the SEC says, had a checkered record that he did not disclose to clients.
In 1992 he pled guilty to a misdemeanor fraud charge for using an impersonator to take a licensing exam he needed to pass to sell securities.
In 1998, he consented to a $5 million court judgment with the SEC for selling unregistered securities.
In 2005, he agreed not to own or control a depository institution without prior FDIC consent, after the Federal Reserve Board of New York and the Federal Deposit Insurance Corp. accused him of involvement in an unlicensed bank holding company.
From 2013 to 2016, the Platinum funds were struggling. Beechwood, with Bodner’s help, invested a significant portion of clients’ assets in the Platinum funds.
Bodner did not advise clients about Platinum’s financial problems, the SEC states, and did not disclose the purpose of the transactions.
His overlapping roles in Beechwood and Platinum allowed him to redeem his interests in the hedge funds by using client funds, the SEC claims, and he also received consulting fees and other compensation.
By the end of 2016, a receiver had been appointed to liquidate the Platinum funds and shortly thereafter Beechwood ceased to operate.
The SEC calculated Bodner’s personal gains at more than $2 million, not including payments already made in related civil cases.
The SEC gave Bodner two weeks to disgorge $2,274,467 and pay a $180,000 fine.
He also was barred from associating with or serving with any organizations dealing with securities.
Bodner consented to the order without admitting or denying the findings.
