Securities and Exchange Commission Files Complaint Against Seattle-Based Investment Advisers Mark F. Spangler and The Spangler Group, Inc.

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On May 17, 2012, the Securities and Exchange Commission (“SEC”) filed a Complaint in the Western District of Washington against Mark F. Spangler (“Spangler”) and The Spangler Group, Inc. alleging the financial adviser and his firm defrauded clients through investing client money in risky start-up companies he co-founded.

In 1998, Spangler allegedly raised over $56 million for private funds he managed, claiming that the funds would invest in publicly traded securities. According to the SEC’s Complaint, from 2003-2011, without notifying investors, Spangler liquidated the funds’ positions in publicly traded securities and transferred the proceeds primarily into two private start-up companies that he co-founded, and at times managed. Spangler allegedly did so even though the investments were inconsistent with his clients’ stated investment objectives.

In late 2010-early 2011, three investors allegedly learned that Spangler had invested the funds in his own companies and requested a complete withdrawal. Spangler was unable to satisfy these requests and initiated state court receivership proceedings. The SEC’s Complaint alleges violations of the Investment Advisers Act and the Securities Exchange Act. It seeks an order enjoining Spangler and TSK from future violations of the securities law, disgorgement of ill-gotten gains, and civil monetary penalties.

KKBS is investigating these allegations and is interested in speaking to investors.  For more information or to discuss this issue, contact Vincent D. Slavens at vslavens@kkbs-law.com.