Former Adviser Gets Nearly 6 Years in Prison for Fraud

A former investment adviser and broker has been sentenced to nearly six years in prison after pleading guilty to stealing millions of dollars from his clients to pay for his personal expenses.

Gary Basralian, 72, of Springfield, New Jersey, was sentenced to 70 months in prison by a US District Court judge on one count of wire fraud and one count of investment adviser fraud. According to court documents, Basralian was a registered broker who provided investment advisory services to clients and received compensation for advising them about securities investments.

From 1989 until December 2017, he was registered with the Financial Industry Regulatory Authority (FINRA) working at a registered investment adviser and broker-dealer located in Jersey City, New Jersey. The firm, known only as “Securities Firm A” in court documents, provided a broker-dealer platform for more than 2,000 independent financial advisers across the US.

For more than 10 years, spanning from July 2007 through November 2017, Basralian defrauded his clients by telling them that he would invest their money in securities and other investments. However, he used those funds for his own personal expenses , including funneling hundreds of thousands of dollars to pay his American Express credit card bills, and thousands of dollars in BMW and mortgage payments.

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When certain clients inquired about the status of their investments, Basralian falsely assured them that their money was invested in real estate, high-interest loans, or securities.. In one instance, Basralian wired money from at least one client’s investment account to accounts that he controlled and used the proceeds for his own benefit.

When the client asked why the account’s value had declined, Basralian provided a fabricated spreadsheet showing that the money was being invested as loans to various companies. He also falsely told the client that the money would be paid back with interest. In the end, Basralian admitted stealing at least $2 million.

In addition to the prison term, Judge Arleo sentenced Basralian to three years of supervised release. In May of 2018, the New Jersey Bureau of Securities revoked Basralian’s agent and investment adviser representative registrations.

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Tags: FINRA, Fraud, Gary Basralian

The funded status deficit of the 100 largest US corporate pension plans ballooned to $306 billion in August from $219 billion at the end of July, as their funded ratio fell to 83.8% from 87.7%, according to actuarial and consulting firm Milliman.

The firm attributed the widening deficit to a sharp drop in the benchmark corporate bond interest rates that are used to value pension liabilities, although it said its effect was somewhat dampened by strong investment returns from fixed-income asset holdings.

Milliman analyzes the 100 largest US corporate pension plans through its Pension Funding Index (PFI). In August, the PFI monthly discount rate fell 42 basis points to 2.95%, which was the lowest recorded since the index was launched 19 years ago. It was also the first time the Milliman 100 PFI had reported a discount rate below 3.00%.

“Discount rates have fallen by 110 basis points over the past 12 months, slashing corporate pension funding and hitting an all-time low for the PFI,” Zorast Wadia, co-author of the Milliman 100 PFI, said in a statement. “In fact, at this time last year the funded ratio for these plans was roughly 10 percentage points higher, at 93.1%, than we’re seeing now.”

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The projected benefit obligation (PBO) increased $104 billion during August, raising the Milliman 100 PFI liability value to $1.887 trillion from $1.783 trillion at the end of July. It was the first time the PBO had increased by at least $100 billion since a $117 billion increase in January 2015.

The aggregate asset value of the Milliman 100 PFI increased $17 billion to $1.581 trillion thanks to August’s 1.33% investment return. That was more than twice the monthly median expected investment return of 0.53% forecasted by the the 2019 Milliman Pension Funding Study.

Over the 12 months from September 2018 to August, the cumulative asset return for pensions in the Millman 100 has been 6.76%.

Milliman said that if the companies in its index were to earn the expected 6.6% median annual asset return, per the 2019 pension funding study, assuming a discount rate of 2.95% through 2020, the funded status would increase to 84.9% by the end of 2019, and 88.5% by the end of 2020.

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Tags: Corporate Pension, discount rates, Funded Status, Pension