Morales splitting Commonwealth Advisors

Well-known investment adviser Walter Morales, who has been accused by investors and the Securities and Exchange Commission of lying to his clients about their investments and trying to hide their losses through a complex series of trades, is getting out of the retail investment business. Morales tells Daily Report that his Commonwealth Advisors, which was known for consistently delivering better-than-average returns and once had a portfolio approaching $750 million, will split in two, pending regulatory approval. The retail, or individual investor, side of the business, which has about $100 million in assets, will be transferred to a new, employee-owned firm called 3rd Street Capital Management. Its principals are Gerald Warrington and Noel Caldwell. The institutional side of the business, which has about $85 million in assets, will remain with Commonwealth. Morales concedes that given the damaging allegations in the SEC suit and the fact that he will be “dealing with it for years,” transferring the assets of the individual investors into a new firm made sense. “We don’t want our clients to be involved in a firm that has issues with the SEC,” he says. “This keeps them insulated.” Morales has denied the allegations in the SEC suit, and also in a suit filed by attorney Patrick Broyles on behalf of local investors. To read more about the allegations, click here. —Stephanie Riegel