A long-awaited trial by the U.S. Securities and Exchange Commission against the now-defunct firm Commonwealth Advisors and its former owner, investment advisor Walter Morales III, was scheduled to be held this week in Baton Rouge federal court. Instead, the federal civil trial has been postponed for more than a year.
Earlier this month, the U.S. District Court rescheduled the trial date for Feb. 21, 2018—not because either side in the years-long dispute requested a continuance, but because the court had a conflict, according to Morales’ attorney Fred Tully.
“Of course we’d all like to get this behind us,” Tully says. “But there’s really nothing we can do it about it.”
In November 2012, the SEC sued Morales and his firm for fraud and mismanagement that led to the loss of more than $178 million invested in high-yield but risky subprime, residential, mortgage-backed securities. Commonwealth has denied any wrongdoing and attributed the losses to the 2008 collapse of the mortgage-backed securities market.
Several clients have also sued Morales in a separate lawsuit that alleges fraud and breach of fiduciary duty. That suit is also still pending in federal court.
In 2013, Morales closed his Commonwealth Advisors. The retail, or individual investor, side of the business was transferred to an employee-owned firm called 3rd Street Capital Management.
Read more about the allegations against Morales and Commonwealth Advisors.
—Stephanie Riegel
