Hedge Fund Focus

SEC Issued Order Against WealthWise, LLC and Jeffrey A. Forrest  For Violations of the Securities Act

On May 15th, 2009, theSEC issued an order of permanent injunction against defendant Jeffrey A. Forrest pursuant to the civil action entitled Securities and Exchange Commission v. WealthWise, LLC, et al. The orrder revokes WealthWise’s registration as an investment adviser with the Commission. The Order also bars Forrest from associating with any broker, dealer, or investment adviser with the right to reapply for association after five years.

The following SEC release reprinted in full, can be found here and you can also view the SEC Order Making Findings And Imposing Remedial Sanctaions Against Jeffrey A. Forrest.

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In the Matter of Wealthwise, LLC and Jeffrey A. Forrest

On May 15, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 (Order) against WealthWise, LLC (WealthWise), a registered investment adviser based in San Luis Obispo, California, and Jeffrey A. Forrest (Forrest), its owner and principal, based on the entry of a permanent injunction against WealthWise and Forrest in the civil action entitled Securities and Exchange Commission v. WealthWise, LLC, et al., Civil Action No. 2:08-cv-06278-GAF-SS, in the U.S. District Court for the Central District of California.

The Order finds that on February 4, 2009, the U.S. District Court for the Central District of California entered a Judgment of Permanent Injunction by consents against WealthWise and Forrest, permanently enjoining WealthWise and Forrest from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint alleged that from April 2005 to October 2006, Forrest recommended that more than 60 of WealthWise’s clients invest approximately $40 million in Apex Equity Options Fund, a hedge fund managed by Salt Lake City-based Thompson Consulting, Inc. (TCI). WealthWise and Forrest failed to disclose a side agreement in which WealthWise received a portion of the performance fee that Apex paid TCI for all WealthWise assets invested in the hedge fund. From April 2005 to September 2007, WealthWise received $388,401.80 in performance fees from TCI. Apex collapsed in August 2007, and WealthWise clients lost nearly all of the money they invested. The Order finds that, for a portion of the time in which Forrest engaged in the conduct underlying the complaint, he was associated with a registered broker-dealer.

Based on the above, the Order revokes WealthWise’s registration as an investment adviser with the Commission. The Order also bars Forrest from associating with any broker, dealer, or investment adviser with the right to reapply for association after five years. WealthWise and Forrest consented to the issuance of the Order without admitting or denying any of the findings in the Order, except with respect to jurisdiction and the entry of the injunction. (Rel. 34-59931; IA-2874; File No. 3-13381)
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