A Travis County grand jury on Dec. 17 indicted James A. Reid, a former stockbroker in Austin, on first-degree felony charges of securities fraud, money laundering, and theft in connection with a short-term investments fund he operated at his company, Reid Capital LLC.
Reid sold investments in a "365 Day Liquidity Offering," which was supposedly comprised of stocks, bonds, and other securities that he would trade.
Reid Capital is not a registered investment adviser. Reid himself has been not been registered to sell securities since 2011, when he was fired from BrokersXpress due to an arbitration claim from a customer that alleged breach of fiduciary duty, misrepresentations, suitability, and excessive commission. At previous firms, Reid was the subject of other customer complaints involving claims he breached his fiduciary duty to clients and received excessive commissions.
According to the indictment, Reid did not disclose to potential clients that previous investors in the 365 Offering lost money and that he used their funds to pay his personal expenses.
Reid also falsely told investors in the 365 Offering that he was a registered adviser. He failed to disclose his regulatory records.