In 2017, Brenda Ann Smith was riding high.

Trained as an accountant, Smith had spent three years raising $105 million for a hedge fund from 40 investors. She owned a seat on the New York Stock Exchange, where she rang the closing bell in June 2017, an event sponsored by her Conshohocken-based broker-dealer CV Brokerage.

Then in early 2018, it all began to unravel.

That February, one trading bet went sour, creating a $10 million loss that Smith promised to “make up herself,” according to a former colleague, who said he alerted investigators.

Instead, she lied to investors and claimed a gain, prosecutors said.

Her fraud came to light this past week when the U.S. attorney in New Jersey filed criminal charges against Smith, alleging that she used funds from new investors to pay off early investors, playing out the classic outlines of a Ponzi scheme. Federal agents on Tuesday arrested the hedge fund CEO at her rented 222 Rittenhouse Square penthouse in Philadelphia, charging her in a massive fraud that cheated investors out of at least $63 million.

From February 2016, Smith, 59, ran a Conshohocken-based network of investment companies that included Broad Reach Capital, Broad Reach Partners, and Bristol Advisors, investigators said. She was the only employee of each company for most of that period. The funds “were essentially her alter-egos,” according to court papers.

To outsiders, Smith was a successful woman in a male-dominated finance world. Educated at Louisiana State University, with an accounting degree, Smith spoke with authority and a dose of Southern charm.

“She talked the talk, and raced right past people who’d been in the industry longer than her. She was different, she came at people with conviction,” said the former colleague. “She owned seats on both the NYSE and the [Philadelphia Stock Exchange], so why wouldn’t she know how to trade?”

But her fund’s returns were too good to be true.

Smith said she was running a hedge fund with a “team of professionals,” and never had a losing month. She posted eye-popping returns of over 113% in 2015, 81% in 2016, and 25% in 2017, net of her high fees. Her stated strategies included high-volume trading in dividend-yielding stocks, options, and a “volatility” trade, betting on big changes in the market, according to marketing materials.

But really, there was just Smith at the helm. She positioned herself as the investment adviser, chief of compliance and head of all trading -- a set-up that regulators later found was ripe for abuse. There was no one checking her work, making sure investors’ money was secure and being deployed as promised.

A simple background check would have turned up trouble. “There were red flags on her BrokerCheck record,” where the industry lists enforcement actions, said Lisa Bragança of Bragança Law, a former SEC enforcement branch chief now in private practice in Chicago.

Bragança noted that Smith was sanctioned by the industry regulator FINRA in 2014 for failing to report a $6,250.90 tax lien and was fined $5,000. "I am not sure if she was already mired in financial problems,” she added.

But when it came to the hedge fund, there was no oversight.

“She wasn’t capable of supervising herself,” said Nicholas Guiliano, a securities lawyer in Center City. “Someone filed a complaint against her in December 2018” alleging that she misappropriated over $3.3 million, he said.

When FINRA securities regulators began investigating, she refused to cooperate, records show. “Stiff-arming a regulator, that’s a red flag,” said the former colleague.

In July, Smith agreed to be barred from the industry because she had failed to respond to a written request for documents.

Meanwhile, despite all the bravado that she displayed to investors, Smith wasn’t investing the bulk of the millions she had received. according to investigators.

Instead she researched and considered several bizarre investments including a country-themed restaurant, crypto-currency, Russian oil shipments, and Western gold mines. She was “wandering from shiny object to shiny object but never doing anything," the former employee said.

She also resisted writing checks, instead relying on wires for all kinds of payments.

Then, big money started to disappear.

Smith bought a second passport from the tiny country of Dominica, and with more than $100 million at her disposal, began traveling extensively -- to Dubai, Curaçao, and other countries, either to raise money or to siphon off funds from the operation, regulators believe.

SEC complaints and Department of Justice documents paint a story of Smith exaggerating her experience, and shifting money around to pay out early investors with later investors’ money.

In March this year, when one of her clients asked to redeem his $46 million stake, Smith made various excuses why her fund couldn’t comply. She falsely claimed another of her companies, London-based CV International, owned a $2.5 billion HSBC bond and listed other “dubious” assets, including $20.25 million in “securitized crypto-currency,” according to the complaint filed by the SEC.

Smith also allegedly spent $2 million on personal American Express credit card charges, and made her own personal bets on the markets.


After earning a degree from LSU, Smith made her way to Pennsylvania working in fund administration and accounting for family offices, or funds for wealthy families. She then positioned herself as a woman-owned brokerage in Conshohocken by buying a shell company and calling it CV Brokerage.

The State Employees Retirement System paid Smith’s firm at least $20,000 in fees to buy and sell state investments over three years ending in 2019. And her firm is listed as one of several “woman-owned broker” firms given SERS trading business, according to annual reports by SERS. Spokespersons for SERS said it “is the responsibility of SERS’ external managers to decide which brokerage firm to utilize.”

Smith, spun a compelling story about her multistrategy hedge fund at conferences around the country.

According to the pitch, her firm Broad Reach Capital established the fund in February 2016 with a “well-vetted trading strategies, managed by experienced investment managers in a risk-controlled manner, the marketing materials said.

The minimum investment: $250,000.

Smith promised no management fee if results were under 6 percent, but she would take 50 percent of returns above that number.

One of Smith’s backers was an investor out of Montreal, who invested over $31 million in the fund through an entity called SureFire. Expecting to redeem $46 million this year, Surefire executives insisted she send back the money, but Smith never did, court records say. Surefire sued Smith and her fund last month in Montgomery County.

According to federal criminal indictments, Smith conducted the fraud mostly by herself -- largely because she controlled every aspect of the firm and its entities.

Smith had no secretary or administrative staff, just some brokers known as “registered representatives” who hung out a shingle under her brokerage firm’s umbrella. But turnover at the firm was high, and employees left in droves, often writing scathing reviews on

“She had an unusual personality, where she’d appear sweet and other times switch to flip and she would be a different person,” said someone who rented space from Smith at her Conshohocken offices. “If an employee challenged her, she’d run them right over.”

Smith hired away Michael Galantino from Boenning & Scattergood to act as CEO of the broker-dealer CV Brokerage. He was not part of the fraudulent hedge fund.

Galantino had a very short tenure. “She quickly put controls on him, had him filling out time sheets every 15 minutes. Here was someone who was brought on to grow her brokerage business,” said the former employee.

Galantino’s LinkedIn page says he worked there for just two months. He didn’t return emails or calls seeking comment.

In May 2018, according to the SEC, Smith began paying off early investors with new investors’ money. An investor wired $5.43 million to her fund’s bank account, but within a few weeks, that money ended up in her other side companies and in a real estate deal, according to the Securities and Exchange Commission’s complaint.

By mid-2018, the former colleague said he alerted regulators that Smith was covering up the losses at the fund.

“She controlled the business – similar to Bernie Madoff – the marketing, the finance, the compliance, the reporting. She produced the return stream every month. She gave that number to Sanville & Co.,” her auditors. The firm, which has an Abington office, didn’t return calls for comment.

After the losses, her behavior became more erratic. According to the federal indictments, between 2016 and 2018, the fund’s actual balances dropped from over $100 million down to just $2 million, and regulators said it’s unclear where the money went.

“A lot of it went out to entities she controlled,” said one person close to the investigation. “Where it went, we just don’t know yet.”

The SEC last week initiated a freeze on Smith’s assets and bank accounts. Investigators are tracing money in accounts she set up in Louisiana, Brazil, Curacao, and elsewhere.

She remains in prison at an Essex County, N.J., jail and no bail package has been arranged, according to the U.S. Attorney’s Office in Newark. She has been appointed a federal public defender.

Staff writer Joseph N. DiStefano contributed to this article.

Correction: This story initially misidentified the job of Michael Galantino. He was the CEO of CV Brokerage.