On June 5, 2026, the SEC charged an investment adviser and related entities with a multi-year fraud involving a pooled investment fund that raised about $4 million from 28 investors. The SEC alleged the defendant misappropriated and commingled funds, concealed losses exceeding $3.6 million, and diverted assets for personal use.

Affinity fraud is a form of financial fraud that relies on social connections and trust. It most often occurs within identifiable groups, such as religious, cultural, or ethnic communities, or social organizations, where members share common values, experiences, or identities. Rather than approaching targets as strangers, those promoting the scheme position themselves as insiders, using familiarity and perceived credibility to create comfort and reduce skepticism.

Ponzi schemes and affinity fraud frequently overlap because both exploit trust and social interactions to operate effectively.

This Blog has written about Ponzi schemes on numerous occasions. A Ponzi scheme is a type of investment fraud where returns to earlier investors are paid using investment capital from new or existing investors, rather than from legitimate profits earned through the enterprise’s business activities.

What does the Labor Department fiduciary standard mean for financial advisors? After telegraphing its punch for almost 6 years, the Department of Labor recently announced the highly anticipated fiduciary standard regulation that will require financial advisors who provide investment recommendations for retirement accounts, such as 401(k)s and IRAs, to meet a fiduciary standard. These advisors are now required to put their clients' interests before their own, rather than adhe