Rep. Mimi Walters, R-Calif., jointly owns a stock brokerage firm with her husband that has raised red flags on Wall Street by employing a large number of brokers with checkered pasts, including a convicted child molester, according to a review of Walters’s financial disclosures and a Reuters analysis published last year.
Walters’s ownership in the firm, Boustead Securities LLC, has not been previously reported.
Her husband, David Walters, founded the firm in 2006 as Monarch Bay Associates LLC after both started their careers at the ill-fated firm Drexel Burnham Lambert, which collapsed in the late 1980s in an insider-trading scandal. The firm changed its name to Monarch Bay Securities before re-branding as Boustead Securities in 2016.
In 2017, Reuters found that Boustead was among 48 brokerage firms with a high concentration of brokers who had reported incidents that could “give investors concern,” including “regulatory sanctions, civil judgments, personal bankruptcies and broker terminations after allegations of misconduct.”
One Boustead broker was fired from Lehman Brothers in the early 1990s after one of his customers took a $10,000 loss, while several others reported facing tens of thousands of dollars in federal tax liens, according to the Financial Industry Regulatory Authority.
Robert Bruce Spertell, a broker hired in 2017, was convicted in 1990 of lewd or lascivious acts with a child and sexual battery in California and is listed on the state’s database of sex offenders. In 1994, he was charged with domestic violence and sentenced to counseling, according to his FINRA disclosure.
Another broker’s criminal record included multiple drug offenses on top of an accusation that he engaged in “churning” — the practice of excessively trading to generate commissions — $53,000 of a client’s money before Monarch Bay hired him.
Another broker was accused of misleading a client while employed at UBS and putting her money into an auction-rate security, an instrument whose marketing and ultimate collapse were part of the financial meltdown in 2008. The client and UBS settled for $53,728.86.
In 2013, Mimi Walters, then a California state senator, disclosed in a filing for her congressional run that she jointly owned Monarch Bay. In her most recent filing in August, she disclosed that she jointly owned Boustead, an asset worth between $100,001 and $250,000.
According to FINRA, David Walters owns between 25 and 50 percent of Boustead, but it’s not clear whether his wife’s stake is included in his ownership.
Mimi Walters, who has represented California’s 45th Congressional District since 2015, is locked in one of the most competitive House races in the country, one of 30 currently rated as a “toss up” by the Cook Political Report.