The allegations read: The plaintiff, securities and exchange commission ("commission"), files this complaint against defendants sapere wealth management, llc, ("sapere") and scott trease ("trease") and alleges that in may 2019, scott trease and his investment advisory firm, sapere, recommended that three of their advisory clients invest a total of $7.3 million in two risky, alternative-investment deals that defendants incorrectly believed were collateralized by a gold safekeeping receipt (skr). These investments came to defendants through a self-described financier, whom trease had befriended in bible study. Defendants had decided to work with this self-described financier to explore supposed alternative-investment opportunities that the financier or his associate identified. From 2018 through early 2019, this self-described financier had presented trease with several other investment opportunities. Those opportunities had consistently fallen apart, but raised red flags that this vein of alternative-investment opportunities would be unsuitable for defendants' advisory clients. Trease and sapere did not reasonably understand these may 2019 investments and thus lacked a reasonable basis to recommend them to their clients. In one of the investments that trease and sapere recommended in may 2019, a client ultimately lost $2.3 million. In the other, defendants placed $5 million of client funds at risk, though defendants and individual 1 ultimately (and belatedly) secured the funds' return. By recommending investments to clients without a reasonable understanding of them, and in the face of red flags suggesting the investment might not be suitable, sapere and trease breached their fiduciary duties of care, in violation of section 206(2) of the investment advisers act of 1940.
