Updated 8.30pm with company reaction

A Malta-based advisory firm has been charged along with its owners with defrauding clients out of more than $75 million, a US financial watchdog announced on Tuesday.  

In a statement earlier this week, the US Securities and Exchange Commission (SEC) said it had charged two North Carolina-based executives, Gregory Lindberg and Christopher Herwig, and their Malta-based registered investment advisory, Standard Advisory Services Limited in court. 

The SEC alleges that they defrauded clients through undisclosed transactions that benefited themselves and their companies in an elaborate insurance racket. 

The alleged racket stretched "from July 2017 through 2018", the SEC said. 

Both Herwig and Lindberg served as directors for the Malta-based firm for periods between 2017 and 2020. 

The advisory firm's website boasts an image of St Julian's Spinola Bay on its homepage.The advisory firm's website boasts an image of St Julian's Spinola Bay on its homepage.

Standard Advisory Services Limited is registered with an address on the Birkirkara bypass and is owned by Standard Malta Holdings Ltd, which is in turn owned by a company registered in North Carolina, Global Health Technology Group LLC.

Currently, its directors are Maltese national Joseph Grioli, US-based Marc Howard Greenspan, and Thomas Schildhammer.  

Grioli has formed part of the company's board since it was formed in 2016. Greenspan only joined the company's board in 2020, replacing Herwig. Schildhammer joined the company's board in May 2018. 

The SEC statement announcing the charges made no mention of the Maltese company's directors. Only Lindberg, Herwig and Standard Advisory Services Limited were cited by the US regulator. 

When contacted, Grioli said that neither he nor any of the other directors were being investigated.   

Previously, Grioli served as managing director of Vodafone Malta for more than 15 years, having played a key role in establishing a local presence for the telecoms giant.

He then moved into financial services, setting up his own company and also chairing Sliema's IIG Bank Malta - a role he holds to this day.

In the 1990s, he also served a five-year term as chairman of the Malta Maritime Authority.

He was heavily involved in public life during that period, serving as a director of the Malta Development Corporation, the Malta Export Trade Corporation, the Malta Council for Economic Development and serving as president of the Malta Federation of Industries for two years.

SEC alleges 'massive fraudulent scheme', company says there are 'factual inaccuracies' 

According to the SEC’s complaint, from July 2017 through 2018, Lindberg and Herwig, through Standard Advisory, breached their fiduciary duties to their clients by fraudulently causing them to engage in undisclosed transactions that were not in their best interest. 

The SEC’s complaint further alleges that the defendants misappropriated more than $57 million in client funds and that Standard Advisory collected more than $21.4 million in advisory fees generated in connection with these schemes. 

Furthermore, in an attempt to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a web of affiliate companies and allegedly used the proceeds to pay themselves or to divert the funds to Lindberg’s other businesses.

"We allege a massive fraudulent scheme, involving unique financial structures and various complex investments, orchestrated by the defendants for their own benefit over their advisory clients’ benefit," said Osman Nawaz, Chief of the Division of Enforcement’s Complex Financial Instruments Unit at the SEC.  

The SEC’s complaint, which was filed in the U.S. District Court for the Middle District of North Carolina, charges Lindberg, Herwig, and Standard Advisory with violating the antifraud provisions of the US Investment Advisers Act of 1940, and seeks disgorgement plus prejudgment interest, penalties, and permanent injunctions.

Standard Advisory Services Limited had been handed an Investment Services Licence by the Malta Financial Services Authority but this was cancelled in September 2020. 

At the time the MFSA had said it had been voluntarily surrendered.

Meanwhile, Standard Advisory Services Ltd. said it is disappointed by the SEC lawsuit and believes the complaint contains many factual inaccuracies.  

"The firm fully cooperated with the SEC’s investigation and, moreover, withdrew its SEC registration in 2019. None of Standard Advisory Services’ current directors are named in the lawsuit. The firm intends to vigorously defend itself against the SEC’s allegations.”

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