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$8.8 million paid to clients of former WealthWise financial adviser Jeffrey Forrest

8/25/2009

The Tribune

The more than $8.8 million judgment awarded to clients of Jeffrey Forrest has been paid, six months after a financial regulatory agency determined that the former San Luis Obispo investment adviser had misrepresented a risky hedge fund as being safe.

Forrest, who owned WealthWise LLC, and Associated Securities, an El Segundo-based broker-dealer with which his firm had been registered to sell securities, abandoned their appeal of the judgment in federal court, according to Phil Aidikoff, a Beverly Hills attorney representing the group of WealthWise investors.

“I can only tell you that they saw the error of their ways and felt that by appealing further, it wouldn’t accomplish anything,” Aidikoff said.

A Southern California attorney representing Associated Securities did not return a call Monday afternoon. Forrest acknowledged in an e-mail to The Tribune that the investors have been paid.

However, he declined to comment on the appeal, which had been filed with the U.S. Court of Appeals for the Ninth Circuit on April 22 and dismissed Aug. 4. Forrest noted that WealthWise LLC is defunct “and is no longer in the business of rendering investment advice.”

The U.S. Securities and Exchange Commission this spring charged the San Luis Obispo man with fraud and barred him from acting as an investment adviser.

A panel of the Financial Industry Regulatory Authority (an independent regulator of U.S. securities firm) found in March that Forrest, who had been a broker with Associated Securities from 1989 through 2007, had steered clients to the APEX Equity Options Fund, a highly speculative investment worth about $40 million that he touted as providing safety, security and liquidity of investor principal.

Investors – representing about 16 county households – lost millions when the fund collapsed in August 2007. Some of the investors – among them a retired nurse, stay-at-home mom and a quadriplegic man – had invested their savings and in some cases borrowed against the value of their homes.

Three other arbitration cases have settled and clients have received damages, although the amount of damages is unknown because of confidentiality agreements reached as part of the settlements.

Two additional cases have been filed by Aidikoff’s firm related to investors in Arizona and Utah.


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