SEC charges ex-Morgan Stanley advisor of NBA players after $13m fraud
Darryl Matthew Cohen was arrested this week and is facing three different federal counts of fraud, which could amount to 20 years in prison if convicted, besides the SEC complaint.
The Securities and Exchange Commission has charged Darryl Matthew Cohen with misappropriating more than $1 million from three current and former NBA players over a period of two and a half years.
Darryl Matthew Cohen is a former registered broker and investment advisor whose last known employer was Morgan Stanley of Westlake Village, CA. His previous employers were Wells Fargo Advisors, LLC, also of Westlake Village, and Merrill Lynch, Pierce, Fenner & Smith Incorporated of New York, NY. He has been in the industry since 1997.
Morgan Stanley fired the investment advisor in 2021, claiming “allegations relating to the representative’s facilitation of outside client business and transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to engage in inappropriate communications with clients”. He was then barred in 2022.
Roughly $13 million from NBA clients
The SEC’s complaint focuses on the period ranging from October 2017 through April 2020, where Cohen allegedly used client funds, without their understanding or authorization, for personal expenditures including to support his son’s amateur basketball program, for a home gym, and to pay back another client whose funds Cohen had misappropriated. Cohen also allegedly sold life insurance settlements to the clients for kickbacks to fund his home improvements.
Andrew Dean, Co-Chief of the Asset Management Unit, said: “As the complaint alleges, instead of protecting his clients’ investments, Cohen took advantage of their trust for his personal gain. Protecting investors from fraud by their financial advisers is a priority for the SEC.”
Although the SEC’s charges focus on his time at Morgan Stanley, where he allegedly defrauded current and former NBA players including Jrue Holiday, Chandler Parsons and Courtney Lee, a previous FINRA investigation found multiple complaints against the advisor starting in 2001: a dispute where the client’s requested damages were $90,000, and the claim was settled for $81,851.00.
Darryl Matthew Cohen was arrested this week and is facing three different federal counts of fraud, which could amount to 20 years in prison if convicted, besides the SEC complaint.
In the indictment, the DoJ alleged that Cohen and the others engaged in fraud schemes to transfer roughly $13 million from NBA clients for personal uses. The DOJ noted that $7 million of that was allegedly misappropriated only by NBA agent Briscoe and convicted con artist Calvin Darden Jr., who has previously pleaded guilty to separate wire fraud charges.
