Defrocked investment adviser and former infomercial star Philip Rousseaux and his Towson firms will remain out of business.
Maryland’s second-highest court ruled Thursday that the state securities commissioner acted within her authority in permanently revoking Rousseaux’s registration and fining him $255,000 after concluding he had committed or participated in more than 1,000 securities violations.
In its reported 3-0 decision, the Court of Special Appeals rejected Rousseaux’s argument through counsel that the commissioner had acted arbitrarily and capriciously in handing down the ultimate sanction against an investor.
The court was especially critical of Rousseaux’s argument that his due-process right to notice was denied as he was assessed an unexpected, “unprecedented” and “disproportionately harsh” punishment.
“Indeed we fail to see how a rational person in the investment advisory business in Maryland could claim a lack of notice that the commissioner has been empowered since 1989 to impose a bar, plus a fine, for any violation of the (Maryland Securities) Act,” Judge Timothy E. Meredith wrote for the court.
“The statute is absolutely clear on this point,” Meredith added. “We perceive no lack of notice to Mr. Rousseaux that he was subjected to being barred as a result of his violation.”
Douglas F. Gansler, Rousseaux’s attorney before the Court of Special Appeals, said the decision was being reviewed. Gansler, a former Maryland attorney general, is with Cadwalader, Wickersham & Taft LLP in Washington.
In an email, Raquel Coombs, a spokeswoman for Maryland Attorney General Brian E. Frosh, said of the decision, “We are pleased.”
Rousseaux gained fame in the Baltimore area through his “Money Guys” television advertisements. He ran two investment firms, Everest Wealth Management Inc. and Everest Investment Advisors Inc.
Maryland Securities Commissioner Melanie Senter Lubin found in 2015 that Rousseaux, either independently or through his Everest financial companies, had misled clients on multiple occasions about service charges and the firms’ stock market successes and falsified forms intended to protect investors when transferring assets. Lubin’s findings and sanctions were upheld by the Baltimore City Circuit Court, prompting Rousseaux’s appeal.
Rousseaux, who has denied wrongdoing, did not question the commissioner’s findings on appeal but challenged the commissioner’s authority to impose such a sanction without sufficient notice.
In its decision, the Court of Special Appeals rejected Rousseaux’s contention that the commissioner invalidly considered violations that had occurred years earlier.
“The act contains no such statute of limitations, and it would make little sense to charge the commissioner with protecting the public against dishonest registrants but then prohibit the commissioner from considering flagrant acts of deception that occurred more than a certain number of years in the past,” Meredith wrote. “The commissioner did not find the argument about a statute of limitations persuasive, and we discern no abuse of discretion in the commissioner’s rejection of that argument.”
Meredith was joined in the opinion by Judges Stuart R. Berger and Robert A. Zarnoch, a retired jurist sitting by special assignment.
The Court of Special Appeals rendered its decision in In the Matter of Everest Investment Advisors Inc. et al., No. 1474 September Term 2017.