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Douglas Elstun: SEC Fraud Charges Against Kansas Advisor
Former Lenexa, Kansas broker and investment adviser Douglas Elstun (CRD# 2338588) has been named in a pending SEC enforcement action alleging he defrauded his customers. Financial Industry Regulatory Authority (FINRA) records show that Elstun is currently not registered as a broker or an investment adviser, though he was most recently registered with Sigma Financial Corporation.
According to Douglas Elstun’s BrokerCheck report, a pending Securities and Exchange Commission action filed in March 2021 alleges that as the former owner of Crossroads Financial Management, he breached his fiduciary duty to his clients and defrauded them “in three primary ways.” The SEC alleges that he charged professional athlete clients higher fees than they had agreed upon, and defrauded some clients further “by charging advisory fees on assets that were not covered by their agreements.” Among other things, he allegedly charged his clients for the purported management of equity in homes and real estate and the value of their vehicles. Per the SEC’s complaint, this conduct resulted in the clients in question receiving over-charges of $360,000. The complaint goes on to allege that Elstun attempted to conceal his fraud by directing his employees “to fabricate advisory agreements with phony fee percentages, which he then produced to the SEC staff.”
The SEC alleges that Douglas Elstun additionally defrauded his clients by misleading them about his trading in hi-risk, leveraged inverse exchange-traded funds. According to the SEC, Elstun ought and held for months—or even years—highly complex products products “typically designed to achieve their stated objectives on a daily basis.” He allegedly did not explain his strategy or the risks associated with the products to his clients. The alleged third form of fraud Elstun engaged in, according to the SEC, was the investment in unsuitable products for his advisory clients, specifically “unsuitable and risky investments in daily leveraged and inverse ETFs that were inconsistent with certain clients’ investment objectives and risk tolerances.” The SEC alleges that all of the above activities resulted in losses of millions of dollars for his clients, and that they constituted violations of securities law. The SEC action remains pending.
According to the Financial Industry Regulatory Authority (FINRA), Douglas Elstun holds 18 years of securities industry experience and is currently not registered as a broker or an investment adviser. His prior registrations include Sigma Financial Corporation in Lenexa, Kansas; FSC Securities Corporation in Atlanta, Georgia; and GR Phelps & Company. He has passed three securities industry qualifying examinations: the Uniform Securities Agent State Law Examination, or Series 63; the General Securities Principal Examination, or Series 24; and the General Securities Representative Examination, or Series 7. He holds zero state securities licenses. (Information current as of July 14, 2021.)