SEC v. Arete Wealth Management LLC; Arete Wealth Advisors LLC; Joey Miller; Jeffrey Larson; Randall Scott Larson; and UnBo Chung, No. LR-26228, Eastern District of New York (Jan. 17, 2025) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26228/ January 17, 2025 Securities and Exchange Commission v. Arete Wealth Management LLC, et al., No. 25-civ-00616 (N.D. Ill. filed Jan. 17, 2025) SEC Charges Arete Wealth Broker-Dealer and Advisory Firms, Their Chief Compliance Officer, and Several Representatives in Connection With Illegal Securities Offering The Securities and Exchange Commission today announced charges against Joey Miller, Jeff Larson, and Randy Larson, formerly dually registered personnel with Arete Wealth Management LLC, a broker-dealer, and Arete Wealth Advisors LLC, an affiliated investment adviser, for fraud, registration violations, and aiding and abetting Arete Wealth Management’s recordkeeping violations. The SEC also charged Arete Wealth Advisors and its Chief Compliance Officer and General Counsel, UnBo (Bob) Chung, with various violations of the federal securities laws related to a coverup of the representatives’ allegedly fraudulent conduct and other compliance failures, and charged Arete Wealth Management with recordkeeping violations. The SEC’s charges stem from a previously-described scheme in which Richard Dale Sterritt, Jr. and six others allegedly defrauded investors through a sham oil-and-gas company, Zona Energy Inc. The complaint alleges that from approximately October 2018 to May 2020, despite the fact that Arete had not approved Zona securities for offer and sale, Miller, Jeff Larson, and Randy Larson sold more than $8 million worth of Zona shares to many of their Arete clients and customers, a practice called "selling away,"which is prohibited by securities laws. The three defendants, as alleged in the complaint, tried to hide the sales by communicating through means not subject to surveillance by Arete, such as through personal phones and email. According to the SEC’s complaint, Miller and Jeff Larson frequently made false and misleading statements to prospective Zona investors and, in return for their fundraising efforts, Sterritt sold them deeply discounted Zona shares. According to the complaint, after Chung and Arete management learned that many clients of Miller, Jeff Larson, and Randy Larson had invested in Zona, Chung and Arete ordered the three to obtain settlement agreements releasing the Arete entities and their management from liability relating to Zona. However, the settlement agreements ultimately signed by more than 100 Arete clients—which Chung claims that he did not read—allegedly contained false and misleading statements as well as an illegal broad liability disclaimer, that could lead a client to incorrectly believe that the client had waived non-waivable causes of action against the adviser, thereby further victimizing already defrauded investors. The SEC also announced settled charges against Michael Sealy for allegedly acting as an unregistered broker-dealer in connection with his efforts to sell Zona shares in violation of Section 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”). Without admitting or denying the SEC’s findings, Sealy agreed to cease and desist from violations of the charged provision, to pay a civil money penalty of $200,000, and to be suspended from participating in an offering of a penny stock for a period of 12 months. The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, charges Arete Wealth Advisors with violating the antifraud provisions of Section 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”), and with violating Advisers Act Section 206(4) and Rule 206(4)-7 thereunder. The SEC’s complaint also charges Arete Wealth Management with violating the recordkeeping provisions of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. The SEC’s complaint further charges Miller, Jeff Larson, and Randy Larson with violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act and with aiding and abetting Arete Wealth Advisors’ violations of the same provisions, with violating Section 15(a)(1) of the Exchange Act, and with aiding and abetting Arete Wealth Management’s violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. The SEC’s complaint additionally charges Miller and Jeff Larson with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Finally, the SEC’s complaint charges Chung with aiding and abetting the violations of Sections 206(1) and (2) of the Advisers Act by Arete Wealth Advisors, Miller, Jeff Larson, and Randy Larson, and with aiding and abetting Arete Wealth Advisors’ violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. The SEC seeks permanent injunctions and civil penalties as to all defendants, and additionally seeks conduct-based injunctions, penny stock bars, and officer and director bars against Miller, Jeff Larson, and Randy Larson. The SEC’s investigation is being conducted by Theresa H. Gue, Austin Thompson, Christopher Ferrante, Christine D. Ely, and Alison R. Levine under the supervision of Sheldon L. Pollock of the SEC’s New York Regional Office. The SEC’s litigation will be led by Oren Gleich and supervised by Preethi Krishnamurthy of the New York Regional Office. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York, the FBI, and the Financial Industry Regulatory Authority.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26228/ January 17, 2025 Securities and Exchange Commission v. Arete Wealth Management LLC, et al., No. 25-civ-00616 (N.D. Ill. filed Jan. 17, 2025) SEC Charges Arete Wealth Broker-Dealer and Advisory Firms, Their Chief Compliance Officer, and Several Representatives in Connection With Illegal Securities Offering The Securities and Exchange Commission today announced charges against Joey Miller, Jeff Larson, and Randy Larson, formerly dually registered personnel with Arete Wealth Management LLC, a broker-dealer, and Arete Wealth Advisors LLC, an affiliated investment adviser, for fraud, registration violations, and aiding and abetting Arete Wealth Management’s recordkeeping violations. The SEC also charged Arete Wealth Advisors and its Chief Compliance Officer and General Counsel, UnBo (Bob) Chung, with various violations of the federal securities laws related to a coverup of the representatives’ allegedly fraudulent conduct and other compliance failures, and charged Arete Wealth Management with recordkeeping violations. The SEC’s charges stem from a previously-described scheme in which Richard Dale Sterritt, Jr. and six others allegedly defrauded investors through a sham oil-and-gas company, Zona Energy Inc. The complaint alleges that from approximately October 2018 to May 2020, despite the fact that Arete had not approved Zona securities for offer and sale, Miller, Jeff Larson, and Randy Larson sold more than $8 million worth of Zona shares to many of their Arete clients and customers, a practice called "selling away,"which is prohibited by securities laws. The three defendants, as alleged in the complaint, tried to hide the sales by communicating through means not subject to surveillance by Arete, such as through personal phones and email. According to the SEC’s complaint, Miller and Jeff Larson frequently made false and misleading statements to prospective Zona investors and, in return for their fundraising efforts, Sterritt sold them deeply discounted Zona shares. According to the complaint, after Chung and Arete management learned that many clients of Miller, Jeff Larson, and Randy Larson had invested in Zona, Chung and Arete ordered the three to obtain settlement agreements releasing the Arete entities and their management from liability relating to Zona. However, the settlement agreements ultimately signed by more than 100 Arete clients—which Chung claims that he did not read—allegedly contained false and misleading statements as well as an illegal broad liability disclaimer, that could lead a client to incorrectly believe that the client had waived non-waivable causes of action against the adviser, thereby further victimizing already defrauded investors. The SEC also announced settled charges against Michael Sealy for allegedly acting as an unregistered broker-dealer in connection with his efforts to sell Zona shares in violation of Section 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”). Without admitting or denying the SEC’s findings, Sealy agreed to cease and desist from violations of the charged provision, to pay a civil money penalty of $200,000, and to be suspended from participating in an offering of a penny stock for a period of 12 months. The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, charges Arete Wealth Advisors with violating the antifraud provisions of Section 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”), and with violating Advisers Act Section 206(4) and Rule 206(4)-7 thereunder. The SEC’s complaint also charges Arete Wealth Management with violating the recordkeeping provisions of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. The SEC’s complaint further charges Miller, Jeff Larson, and Randy Larson with violating the antifraud provisions of Sections 206(1) and 206(2) of the Advisers Act and with aiding and abetting Arete Wealth Advisors’ violations of the same provisions, with violating Section 15(a)(1) of the Exchange Act, and with aiding and abetting Arete Wealth Management’s violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. The SEC’s complaint additionally charges Miller and Jeff Larson with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Finally, the SEC’s complaint charges Chung with aiding and abetting the violations of Sections 206(1) and (2) of the Advisers Act by Arete Wealth Advisors, Miller, Jeff Larson, and Randy Larson, and with aiding and abetting Arete Wealth Advisors’ violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. The SEC seeks permanent injunctions and civil penalties as to all defendants, and additionally seeks conduct-based injunctions, penny stock bars, and officer and director bars against Miller, Jeff Larson, and Randy Larson. The SEC’s investigation is being conducted by Theresa H. Gue, Austin Thompson, Christopher Ferrante, Christine D. Ely, and Alison R. Levine under the supervision of Sheldon L. Pollock of the SEC’s New York Regional Office. The SEC’s litigation will be led by Oren Gleich and supervised by Preethi Krishnamurthy of the New York Regional Office. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York, the FBI, and the Financial Industry Regulatory Authority.