SEC v. Julie Anne Darrah; and Vivid Financial Management, Inc., No. LR-25885, Central District of California (Oct. 25, 2023) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25885 / October 25, 2023 Securities and Exchange Commission v. Julie Anne Darrah, et al., No. 2:23-cv-008843-CAS-AGR (C.D. Cal., filed Oct. 20, 2023) SEC Obtains Emergency Relief Freezing Assets of Investment Adviser Charged with Defrauding Elderly Clients The Securities and Exchange Commission announced today that it has filed charges and obtained a consented-to asset freeze against a Santa Maria, California-based investment adviser, who allegedly defrauded her victim clients of over $2 million. According to the SEC’s complaint, Julie Anne Darrah and her firm, Vivid Financial Management, Inc. (“VFM”), misappropriated approximately $2.25 million from at least nine clients who had hired Darrah and VFM to be their investment adviser. The complaint alleges that Darrah primarily targeted elderly female advisory clients, many of whom had come to rely on Darrah for their financial well-being, including one client who lives in a memory care facility. The complaint states that Darrah gained control of her victim’s assets by becoming the trustee of their trusts, using standing letters of authorization to transfer funds from their brokerage accounts to their bank accounts, becoming the signatory on their bank accounts, and/or obtaining power of attorney over their property and accounts. According to the complaint, Darrah transferred her victims’ money to her personal bank accounts, where she commingled the funds with her own money that she used to buy and improve real properties, pay her personal expenses, buy luxury vehicles, and buy and operate restaurant businesses at a loss. The complaint further alleges that Darrah concealed her scheme by, among other things, changing client account mailing addresses to her own address, falsely disclosing that she was not acting as the trustee for any clients, and having a client initial two backdated promissory notes that Darrah provided to the SEC in response to its subpoenas. The SEC’s complaint, filed in the U.S. District Court for the Central District of California on October 20, 2023, charges Darrah and VFM with violating Section 10(b) and Rules 10b-5(a) and (c) of the Securities Exchange Act of 1934; Section 17(a)(1) of the Securities Act of 1933; and Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940 (the “Advisers Act”). It also charges VFM with violating Section 206(4) and Rules 206(4)-2 and 206(4)-7 of the Advisers Act, and it charges Darrah with aiding and abetting VFM’s primary violations of those provisions. The complaint seeks disgorgement of allegedly ill-gotten gains, prejudgment interest, monetary penalties, and permanent and conduct-based injunctions. Darrah agreed to the entry of a preliminary injunction against her as well as an order freezing assets, requiring an accounting, prohibiting the destruction of documents, and granting expedited discovery, which the district court entered on October 20, 2023. The SEC’s ongoing investigation is being conducted by staff in the SEC’s Los Angeles Regional Office and Jonathon Grobelski of the SEC’s Chicago Regional Office and is supervised by Robert Conrrad. The SEC’s litigation will be led by Douglas Miller. SEC complaint

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25885 / October 25, 2023 Securities and Exchange Commission v. Julie Anne Darrah, et al., No. 2:23-cv-008843-CAS-AGR (C.D. Cal., filed Oct. 20, 2023) SEC Obtains Emergency Relief Freezing Assets of Investment Adviser Charged with Defrauding Elderly Clients The Securities and Exchange Commission announced today that it has filed charges and obtained a consented-to asset freeze against a Santa Maria, California-based investment adviser, who allegedly defrauded her victim clients of over $2 million. According to the SEC’s complaint, Julie Anne Darrah and her firm, Vivid Financial Management, Inc. (“VFM”), misappropriated approximately $2.25 million from at least nine clients who had hired Darrah and VFM to be their investment adviser. The complaint alleges that Darrah primarily targeted elderly female advisory clients, many of whom had come to rely on Darrah for their financial well-being, including one client who lives in a memory care facility. The complaint states that Darrah gained control of her victim’s assets by becoming the trustee of their trusts, using standing letters of authorization to transfer funds from their brokerage accounts to their bank accounts, becoming the signatory on their bank accounts, and/or obtaining power of attorney over their property and accounts. According to the complaint, Darrah transferred her victims’ money to her personal bank accounts, where she commingled the funds with her own money that she used to buy and improve real properties, pay her personal expenses, buy luxury vehicles, and buy and operate restaurant businesses at a loss. The complaint further alleges that Darrah concealed her scheme by, among other things, changing client account mailing addresses to her own address, falsely disclosing that she was not acting as the trustee for any clients, and having a client initial two backdated promissory notes that Darrah provided to the SEC in response to its subpoenas. The SEC’s complaint, filed in the U.S. District Court for the Central District of California on October 20, 2023, charges Darrah and VFM with violating Section 10(b) and Rules 10b-5(a) and (c) of the Securities Exchange Act of 1934; Section 17(a)(1) of the Securities Act of 1933; and Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940 (the “Advisers Act”). It also charges VFM with violating Section 206(4) and Rules 206(4)-2 and 206(4)-7 of the Advisers Act, and it charges Darrah with aiding and abetting VFM’s primary violations of those provisions. The complaint seeks disgorgement of allegedly ill-gotten gains, prejudgment interest, monetary penalties, and permanent and conduct-based injunctions. Darrah agreed to the entry of a preliminary injunction against her as well as an order freezing assets, requiring an accounting, prohibiting the destruction of documents, and granting expedited discovery, which the district court entered on October 20, 2023. The SEC’s ongoing investigation is being conducted by staff in the SEC’s Los Angeles Regional Office and Jonathon Grobelski of the SEC’s Chicago Regional Office and is supervised by Robert Conrrad. The SEC’s litigation will be led by Douglas Miller. SEC complaint