UNITED STATES SECURITIES AND EXCHANGE COMMISSION

IA Release 4941, June 14, 2018: The Securities and Exchange Commission (Commission) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act) against William Jordan (Jordan). On the basis of this Order and Jordan's Offer, the Commission finds that on June 7, 2018, a final judgment was entered by consent against Jordan, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. William M. Jordan, Civil Action Case Number 8:18-cv-00852-DOC-MRW, in the United States District Court for the Central District of California. The Commission's complaint alleged that, in connection with the sale of limited liability company interests and promissory notes to advisory clients, Jordan misrepresented the use of investor proceeds, overstated asset values, paid excessive management fees and bonuses, failed to conduct audits or reviews of the funds' financial statements as required by the offering documents, had undisclosed conflicts of interest, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors.

Order

Bar (Permanent)

investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent or NRSRO

Indefinite

6/14/2018

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 24142, May 15, 2018: William M. Jordan (Jordan), the owner and principal of two investment advisory companies that offered investments in private funds (collectively referred to as the "WJA Funds"), defrauded his investment advisory clients over a period of years, before putting the WJA Funds into bankruptcy. Through offerings beginning in 2011 and lasting into 2016, Jordan raised more than $71 million from his advisory clients for sixteen investment funds. Jordan represented that investor money would be used for certain disclosed purposes; that his compensation would be limited to particular amounts; and that the WJA Funds were audited and custodied by third parties. In fact, Jordan, who had complete control of the WJA Funds' finances, commingled investor money; concealed the WJA Funds' true performance; engaged in pervasive, conflicted, and undisclosed inter-fund transfers; overpaid himself and his entities; and concealed his prior securities disciplinary history-giving the false appearance of a successful business enterprise, when in fact investor money was being shared amongst the WJA Funds. Jordan controlled the entire advisory business enterprise. He met with the advisory clients and supervised the employees. In addition, he ran the investment advisory companies and the private investment fund operations. Finally, he made the decisions about the private investment fund investments, focusing on deeds of trust securing real-estate loans (trust deeds) but also investing in real estate, interests in private businesses and other securities. The core of the misconduct was that Jordan improperly treated the WJA Funds as one pool of money, regularly moving money among the WJA Funds to meet cash flow needs. Then in 2013, Jordan created a new fund, to manage and liquidate defaulting trust deeds held by other funds. Jordan directed the Fund to issue promissory notes to other funds in exchange for the defaulting trust deeds. Jordan's business practice was to exchange the trust deeds for promissory notes at face value without applying a discount for collectability. This overstated the value of the promissory notes held in the WJA Fund that transferred out the defaulting trust deeds and hence the corresponding total investment value. Using these inflated valuations, Jordan overpaid management fees and bonuses to his investment advisory firm. During the SEC's investigation, Jordan retained an auditor for the Fund. In February 2017, the auditor withdrew before completing the audit, concluding that the financial statements were not auditable. Jordan then transferred control of his companies to a chief restructuring officer (CRO), and in May 2017, they filed for protection under Chapter 11 of the Bankruptcy Code. The SEC's complaint charges Jordan with violations of 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 (2) of the Investment Advisers Act of 1940.

Judgment Rendered

Injunction

California

Subject was principal of IA business that failed to report millions in losses to clients for years and commingled funds and failed to perform required audits and sold unregistered securities by means of misstatement or omission of material facts.

Stipulation and Consent

Bar (Permanent)

Any employment in securities industry or commodities market

8/16/2017

Revocation

FINRA

NASD RULES 2110, 2310, 3040 - WILLIAM JORDAN RECOMMENDED AND SOLD CAPITAL APPRECIATION BONDS (GENERAL OBLIGATION BONDS OF AN ISSUER, BACKED BY A POOL OF UNDERLYING INSURANCE POLICIES) TO INVESTORS BY MEANS OF A PRIVATE PLACEMENT MEMORANDUM OR PROSPECTUS. JORDAN OFFERED AND SOLD THE BONDS TO FIRM CUSTOMERS UNDERTAKING VERY LITTLE INVESTIGATION OF THE COMPANY SO HE WAS NOT AWARE THAT THE ISSUER PRINCIPALS TRANSFERRED APPROXIMATELY $37 MILLION IN CUSTOMER FUNDS DIRECTLY INTO A BANK ACCOUNT WHICH WAS USED AS A SLUSH FUND TO PAY FOR BUSINESS EXPENSES, PAYROLL EXPENDITURES, COMMISSIONS AND PERSONAL EXPENSES. ALL INVESTOR FUNDS WERE DEPLETED, LEAVING MANY LIFE INSURANCE POLICY PREMIUMS FOR LIFE SETTLEMENTS UNPAID. FIRM CUSTOMERS INVESTED A TOTAL OF $90,000 IN THE BONDS AND JORDAN RECEIVED $6,300 TOTAL IN COMMISSIONS. JORDAN FAILED TO PROVIDE HIS MEMBER FIRM WITH WRITTEN NOTICE OF HIS PARTICIPATION IN THE SALE OF THESE SECURITIES AND TO RECEIVE APPROVAL FROM HIS FIRM. JORDAN LACKED A REASONABLE BASIS TO RECOMMEND THE PURCHASE OF THE BONDS TO HIS CUSTOMERS. JORDAN SOLD THE PRODUCT WITHOUT CONDUCTING DUE DILIGENCE REGARDING THE QUALIFICATIONS OF PRINCIPALS TO CONDUCT THE BUSINESS OF LIFE SETTLEMENT AND/OR CAPITAL APPRECIATION BOND SALES AND FAILED TO DETERMINE HOW AND/OR BY WHOM THE LIFE EXPECTANCY OF THE UNDERLYING INSUREDS WAS ESTABLISHED, INSTEAD RELYING ON THE BONDING COMPANY TO LIMIT THE DURATION OF THE PRODUCT. THUS, JORDAN DID NOT ADEQUATELY UNDERSTAND THE CONDITIONS OF THE INVESTMENT OR IT RELATIVE RISKS AND REWARDS.

Acceptance, Waiver & Consent(AWC)

Civil and Administrative Penalty(ies)/Fine(s)

$21,300.00

Suspension

ANY CAPACITY

THREE MONTHS

7/16/2012

10/15/2012

WITHOUT ADMITTING OR DENYING THE FINDINGS, JORDAN CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS FINED $21,300, WHICH INCLUDES THE DISGORGEMENT OF COMMISSIONS RECEIVED OF $6,300, AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR THREE MONTHS. THE FINE IS DUE AND PAYABLE EITHER UPON REASSOCIATION WITH A MEMBER FIRM FOLLOWING THE SUSPENSION OR PRIOR TO ANY REQUEST FOR RELIEF FROM ANY STATUTORY DISQUALIFICATION RESULTING FROM THIS OR ANY OTHER EVENT OR PROCEEDING, WHICHEVER IS EARLIER. THE SUSPENSION IS IN EFFECT FROM JULY 16, 2012 THROUGH OCTOBER 15, 2012.

SECURITIES EQUITY GROUP

Permitted to Resign

APPLICANT WAS PERMITTED TO RESIGN AFTER THE FIRM LEARNED THAT HE HAD ENGAGED IN THE SALE OF SECURITIES THAT WERE NOT AUTHORIZED BY SECURITIES EQUITY GROUP.