The allegations read: The securities and exchange commission (commission) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against vora wealth management, pllc (vora wealth) and dharmesh virendra vora (vora) (collectively, respondents). In anticipation of the institution of these proceedings, respondents have submitted offers of settlement which the commission has determined to accept. The commission finds that these proceedings arise out of breaches of fiduciary duty and compliance failures by vora wealth, a registered investment adviser, and vora, vora wealth's sole owner and principal investment professional, who invested the majority of his advisory clients' assets in structured notes without adequate disclosure. Between at least november 6, 2020, through november 4, 2021, vora wealth and vora used their discretionary authority over advisory client accounts to purchase structured notes that were inappropriate for the majority of their clients, particularly given the clients' expressed safety and income goals, net worth, retirement status, and sophistication. The structured notes were tied to four stocks traded on nasdaq. Of the 872 client accounts with securities holdings at vora wealth, vora invested approximately 738 accounts (85%) in these structured notes, using approximately $124 million of the approximately $139.5 million in vora wealth's total assets under management. For many clients, including those who relied on distributions from their accounts as part of their monthly living expenses, vora sold their annuities held at vora's insurance firm to purchase the structured notes, vora did not inform many of his clients that he purchased the structured notes until after they saw the investment on their account statements. Most of vora wealth's clients never received an investment prospectus. Then, when verbally describing the investment to clients, vora downplayed the possibility that they could lose most, if not all, of their principal invested in the notes, and instead touted the 18% to 32.5% annualized monthly interest payments. Beginning in november 2021, one of the stocks in the structured notes' basket fell below the 50% downside protection level, which terminated the coupon payments to clients, and that stock never recovered. As of july 2024, most of the structured notes have reached maturity, and vora wealth's clients' accounts have a collective realized loss of their principal of over $89 million. Additionally, during this same period, vora wealth and vora received undisclosed benefits from one of the brokers through which they purchased most of the notes, including a wine tasting, as well as payments to subsidize a vora wealth client event. As vora wealth's sole owner and principal investment adviser representative, vora was responsible for vora wealth's failures. Based on this conduct, vora wealth and vora willfully violated sections 206(1) and 206(2) of the advisers act. Vora wealth also willfully violated, and vora caused vora wealth's violations of, section 206(4) of the advisers act and rule 206(4)-7 thereunder.
