In a statement, Osman Nawaz, Chief of the Division of Enforcement’s Complex Financial Instruments Unit, described it as “a massive fraudulent scheme, involving unique financial structures and various complex investments, orchestrated by the defendants for their own benefit over their advisory clients’ benefit.”
According to the SEC’s complaint, from July 2017 through 2018, Gregory Lindberg and Christopher Herwig, through Standard Advisory, “breached their fiduciary duties to their advisory clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in the best interest of their clients.” The SEC’s complaint further alleged Lindberg and Herwig “misappropriated more than $57 million in client funds, and that Standard Advisory collected more than $21.4 million in advisory fees generated in connection with these schemes,” the SEC stated.
“In an attempt to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a web of affiliate companies and allegedly used the proceeds to pay themselves or to divert the funds to Lindberg’s other businesses,” the SEC stated.
The SEC’s complaint, filed in the U.S. District Court for the Middle District of North Carolina, charges Lindberg, Herwig, and Standard Advisory with violating the antifraud provisions of the Investment Advisers Act of 1940, and seeks disgorgement plus prejudgment interest, penalties, and permanent injunctions.
The SEC’s charges follow one day after a federal judge set a March 2023 date for Lindberg’s criminal retrial after he was convicted in 2020 over corruption charges for allegedly attempting to bribe North Carolina’s insurance commissioner in exchange for his insurance business getting preferential regulatory treatment. Lindberg, who served 20 months in prison, originally had been sentenced to more than seven years, but a federal appeals court in June overturned the conviction after concluding the trial judge erred by giving misleading jury instructions before deliberations, thus resulting in his release. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.