The allegations read: The securities and exchange commission (the "commission"), for its complaint against knight nguyen investments, christopher knight lopez ("chris lopez"), and forrest andrew jones ("forrest jones") (collectively, "defendants"), and also jayson lopez ("jayson lopez"), alleges that the firm, a registered investment adviser, its majority owner, chris lopez, and its investment adviser representative, forrest jones, raised at least approximately $3.7 million in a scheme to invest funds from advisory clients and retail investors in at least five fraudulent securities offerings. The defendants lured advisory clients and retail investors, most of whom were relatively unsophisticated, with promises of high returns from secure investments, but then recommended and sold extremely risky investments that did not meet the firm's stated investment criteria and that related to high risk or fraudulent companies that, in most cases, were owned, controlled, or associated with chris lopez and/or his older brother, jayson lopez. Chris lopez and forrest jones made numerous materially false and misleading statements and omissions in connection with the scheme, including misstatements and omissions about the safety and security of the recommended investments, the returns that clients and investors could expect to receive, and the assets and financial condition of the companies issuing the investments. The firm and chris lopez also made false statements and omitted material facts necessary to make the statements it made regarding litigation not misleading in the firm's forms adv part 2. Chris lopez also misappropriated and misapplied the funds of some of the firm's advisory clients, and he created false financial statements and other false financial documents relating to certain of the investment issuers to inflate their assets. Jayson lopez aided and abetted his brother chris lopez in these deceptive acts, including by misusing investment funds for his and his brother's benefit and helping his brother to pass off the false financial documents. In addition, the firm, aided and abetted by chris lopez: filed an application to register as an investment advisor and forms adv with the sec that misrepresented the firm's assets under management; filed forms adv with the sec that failed to make adequate required disclosures of conflicts of interests; failed to comply with the statute and sec rule governing the custody of client assets; and failed to comply with statutes and sec rules requiring the firm to adopt and implement policies and procedures and to make and keep books and records. As a result of his misconduct, forrest jones violated sections 10(b) and 15(a) of the exchange act and rule 10b-5 thereunder and section 17(a) of the securities act. Forrest jones aided and abetted the firm's and chris lopez's violations of sections 206(1) and (2) of the advisers act.
