Clarity and Understanding for the Workplace

Updates

Brightline Solutions updates IA Act UnwrappedTM on a daily basis. These updates include new Releases, No-Action Letters, Enforcement Cases, Self-Examination Tools and Information related to all aspects of investment adviser compliance.  Subscribers are assured that they have access to the most current information available. The following is a selection of some of the more recent changes. Please login to access the information from the associated databases within IA Act UnwrappedTM.

Costumes, Candy, and Compliance
SEC Commissioner Hester M. Peirce - Remarks at the NSCP 2018 National Membership Conference
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information and to the Risks Tab under Regulatory Database Rule 206(4)-7

IA-5064 In the Matter of Eldrick E. Woodley d/b/a Woodley & Co. Wealth Strategies
In civil case, found guilty of misappropriating client funds
Public hearing ordered

IA-5063 In the Matter of Douglas P. Simanski
Fraud
Barred from association and barred from participating in any offering of a penny stock

Risk-Based Examination Initiatives Focused on Registered Investment Companies 
National Exam Program OCIE Risk Alert

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Investor Testing of Form CRS Relationship Summary
SEC’s Office of the Investor Advocate Research Report
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Industrial Alliance, Investment Management Company
No-Action Letter under Advisers Act Sec. 203(a)

SEC Charges Advisory Firm With Due Diligence and Monitoring Failures:
Advisers Act §§204, 206(2), 206(4), and 207 & Rules 204-2(a)(3) and 206(4)-7 violations
IA-5062 In the Matter of Mark A. Elste
Elste agreed to a cease-and-desist order, censure, and to pay a $45,000 civil penalty
IA-5061 In the Matter of Pennant Management, Inc.
Pennant ordered to pay a $400,000 civil penalty

IA-5060 In the Matter of Brett Thomas Graham
Order Denying Application for Consent to Associate

IA-5059 In the Matter of Todd Elliott Hitt
Misappropriated investor funds
Barred from association

LR-24334 SEC v. Douglas P. Simanski
SEC Charges IA with Running $3.9 Million Fraud

Enforcement Division Annual Report - FY18
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

LR-24328 SEC v. Sean Kelly et al.
SEC Stops Broker's Ongoing Theft of Retirees' Investment Funds and Obtains Asset Freeze

LR-24324 SEC v. Alexander C. Burns, et al
Co-Owner of Defunct NY-Based Private Equity Firm Consents to Judgment for Defrauding Advisory Clients

IA-5058 In the Matter of Michael B. Rothenberg
Misappropriated client funds for personal use
Barred from association for 5 years

IA-5057 In the Matter of John H. Rogicki
Misappropriated $9 million from a charitable foundation advisory client
Barred from association

SEC Strategic Plan 2018 - 2022
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-5056 In the Matter of Ross B. Shapiro
Repeatedly made materially misleading statements to customers about the prices at which Nomura had bought and/or sold RMBS and the amount of the firm’s compensation for arranging the trades
Barred from association and barred from participatin in any offering of a penny stock

LR-24312 SEC v. Ross B. Shapiro, Michael A. Gramins and Tyler G. Peters
Final Judgment against Former Nomura RMBS Trading Supervisor, Ordered Barred from Association with Brokerage Firms

From the Data Rush to the Data Wars: A Data Revolution in Financial Markets
Speech by Commissioner Kara M. Stein
Georgia State University College of Law – Henry J. Miller Distinguished Lecture Series
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Remedies and Relief in SEC Enforcement Actions
Speech by Steven Peikin, Co-Director SEC's Division of Enforcement
PLI White Collar Crime 2018: Prosecutors and Regulators Speak
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Testimony on “Oversight of the SEC’s Division of Investment Management”
Dalia Blass, Director, Division of Investment Management
Before the United States House of Representatives Committee on Financial Services, Subcommittee on Capital Markets, Securities, and Investment

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-5055 In the Matter of Paul T. Rampoldi
In criminal case, convicted of conspiring to commit securities fraud, insider trading and money laundering
Barred from association and barred from participating in any offering of a penny stock

IA-5054 In the Matter of LendingClub Asset Management, LLC, Renaud Laplanche, and Carrie Dolan
Private fund purchased interests in certain loans that were at the risk of expiring unfunded, in breach of fiduciary duty and inconsisten with loan allocation procedures; improperly adjusted monthly returns to improve reports
LCA is ordered to pay a civil monetary penalty of $4 million; Laplanche is for a period of 3 years barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter and ordered to pay a civil monetary penalty of $200,000; Dolan is ordered to pay a civil monetary penalty of $65,000

IA-5053 In the Matter of Lawrence Allen Deshetler
Scheme to obtain funds from clients and deposit the money into an account for his personal use
Public hearing ordered

LR-24291 SEC v. Goldsky Asset Management, LLC and Kenneth Grace
Fraud - made false and misleading statements on Forms ADV
SEC is seeking a judgment ordering permanent injunctive relief and civil monetary penalties against Goldsky and Grace

IA-5052 In the Matter of Gary Bernard Ross
Insider trading
Barred from association for 5 years; ordered to pay disgorgement, prejudgment interest and a civil monetary penalty in the same amount as the disgorgement

IA-5051 In the Matter of Ismail Elmas
In criminal case, convicted of misappropriating client funds for personal use
Public hearing ordered

IA-5050 In the Matter of Putnam Investment Management, LLC and Zachary Harrison
Harrison caused Putnam to engage in prohibited securities transactions (prearranged dealer-interposed cross trades in which trading counterparties purchased fixed income securities from certain Putnam advisory accounts and then resold the securities to other Putnam advisory account) which Putnam did not detect
Putnam is ordered to pay a civil monetary penalty of $1 million; Harrison is suspended from association for 9 months and ordered to pay a civil monetary penalty of $50,000

IA-5049 In the Matter of Leroy "Lee" K. Young
In civil case, convicted of illegally raising money from investors
Barred from association and barred from participating in any offering of a penny stock

IA-5048 In the Matter of Voya Financial Advisors, Inc.
Charged with Deficient Cybersecurity Procedures - Failed to adopt policies and procedures to protect customer records and information in violation of Reg S-P, and failed to develop and implement a written Identity Theft Prevention Program in violation of Reg S-ID
Voya has retained a Comlpiance Consultant and is ordered to cease and desist from future violations of Reg S-P & Reg S-ID, and pay a $1 million civil monetary penalty

IA-5047 In the Matter of Hudson Housing Capital, LLC
Since being registered, firm failed to distribute annual audited financial statements, in violation of the custody rule; failed to adopt and implement written policies & procedures and review them at least annually, in violation of the compliance programs rule
Ordered to pay a civil monetary penalty of $65,000
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Enforcement Cases under Regulatory Database Rules 206(4)-2 & 206(4)-7

IA-5046 In the Matter of Thomas J. Caufield
In civil action, convicted of fraud - misled investors about franchise’s financial condition and the safety of their investments
Barred from association

IA-5045 In the Matter of Todd Wortman
IA-5044 In the Matter of Dawn Roberts
In related civil actions, convicted of fraudulent schemes to generate fees by Hope Advisors, LLC
Wortman is barred from association; Roberts is suspended for 12 months

IA-5043 In the Matter of MAry A. Faher
In criminal case, convicted of four counts of securities fraud
Barred from association and barred from participating in any offering of a penny stock

IA-5042 In the Matter of Cory Ryan Williams
In criminal case, pled guilty to transactional money laundering
Barred from association and barred from participating in any offering of a penny stock

LR-24285 SEC v. Hope Advisors, LLC, et al.
Scheme to collect extra monthly fees from a pair of hedge funds they managed
Consent judgment against IA & Principal

LR-24283 SEC v. Jason W. Galanis, et al.
Stock fraud scheme
SEC settles action against six defendants

IA-5041 In the Matter of Ophrys, LLC
Failure to provide adequate written disclosure to clients regarding the capacity in which it was acting with respect to, and obtain consent from its clients for, agency transactions for which Ophrys received compensation in addition to its advisory fee, and Ophrys’ failure to disclose its role in a principal transaction
Ordered to pay a civil monetary penalty of $500,000

Sixth action arising out of enforcement initiative to combat cherry-picking led by the SEC's Los Angeles Regional Office:
LR-24278 SEC v. World Tree Financial, LLC, et al.
IA & Senior Officers charged with cherry-picking and defrauding clients

IA-5040 In the Matter of Joel N. Burstein
In civil action, found to have participated in a scheme to misappropriate and misuse millions of dollars of investor funds
For a period of 10 years, barred from association and barred from participating in any offering of a penny stock

IA-5039 In the Matter of Travis A. Branch
In civil action, SEC complaint alleged Branch made false and misleading statements to customers that CMOs traded in a CMO Program were safe and secure investments that would produce consistent income; however, many customers ended up losing their investments, and margined customers owed Brookstreet’s clearing firm hundreds of thousands of dollars
Public hearing ordered

IA-5038 In the Matter of Karen Bruton, CPA and Hope Advisors, LLC
In criminal case, found to have perpetuated a scheme to charge unearned fees to a fund
Public hearing ordered

Orders vacating bars:
IA-5032 In the Matter of Wing F. Chau
IA-5031 In the Matter of Terry M. Deru
IA-5030 In the Matter of Evan Andrew Zarefsky
IA-5029 In the Matter of Anthony Scolaro
IA-5028 In the Matter of James R. Holdman
IA-5027 In the Matter of Matthew G. Teeple
IA-5026 In the Matter of James E. Putman
IA-5025 In the Matter of Walter J. Clarke
IA-5024 In the Matter of Enrica Cotellessa-Pitz
IA-5023 In the Matter of Paul T. Mannion, Jr. and Andrew S. Reckles
IA-5022 In the Matter of Phillip Dennis Murphy
IA-5021 In the Matter of Karl Motey
IA-5020 In the Matter of Daniel Moshe Naeh
IA-5016 In the Matter of Frank R. Peperno
IA-5015 In the Matter of Matthew Crisp
IA-5014 In the Matter of John J. Bravata and Antonio M. Bravata

IA-5037 In the Matter of Susan E. Walker
In criminal case, convicted of mail fraud; defrauded clients, diverted client funds for her own use
Public hearing ordered

IA-5036 In the Matter of Jennifer R. Johnson
In criminal case, convicted of Theft-By-Swindle & Attempted Theft-By-Swindle; transferred funds from customer accounts to an account she controlled
Public hearing ordered

IA-5035 In the Matter of Creative Planning, Inc. and Peter A. Mallouk
Violations included (i) hundreds of distributed radio advertisements that contained prohibited client testimonials; (ii) failures to enforce the firm’s Code of Ethics with regard to the radio advertisements and the reporting and review of certain securities accounts in which the firm’s president had a beneficial interest; (iii) failure to keep true and accurate books and records; and (iv) failure to adopt and implement adequate written policies and procedures
CPI is ordered to pay a civil monetary penalty of $200,000; Mallouk ordered to pay a civil monetary penalty of $50,000
Added to the IA Act UnwrappedTM Releases Database and to Significant Cases under Regulatory Database Rule 204A-1 Code of Ethics & Rule 206(4)-1 Advertisements

IA-5034 In the Matter of Heidi Wivolin
In criminal case, pled guilty to conspiracy to commit mail fraud, filing a fraudulent tax return and tax evasio;n found guilty of defrauding a client
Public hearing ordered

IA-5033 In the Matter of John L. Gathright, Jr.
In criminal case, found guilty of mail fraud and misusing client fuds for his own benefit
Public hearing ordered

LR-24270 SEC v. Thomas J. Caufield
Former Owner of Investment Education Franchise Charged with Misleading Investors

Orders vacating bars from association:
IA-5019 In the Matter of Douglas F. Whitman
IA-5018 In the Matter of I. Joseph Massoud
IA-5017 In the Matter of Brian Scott Zwerner
IA-5013 In the Matter of Matthew Adam Rothman
IA-5012 In the Matter of Frances M. Guggino
IA-5011 In the Matter of Edward L. Maggiacomo, Jr.

IA-5010 In the Matter of Cecil Gregory Earls and Thomas R. Caggiano
Earls has prior criminal and civil judgements against him, was sentenced to prison and ordered to pay restitution; after release from prison, made false and misleading statements about the management of an unregistered hedge fund adviser that he formed and its affiliated hedge fund;
Caggiano falsely represented management of hedge fund and allowed Earls to conduct and direct all trading and transactions in the account
Earls is barred from association; Caggiano is barred from association, and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, and ordered to pay a civil monetary penalty of $25,000

IA-5009 In the Matter of Capital Analysts, LLC
Disclosure failures in connection with its mutual fund share class selection practices and receipt of revenue sharing payments
Respondent must pay disgorgement and prejudgment interest and a civil monetary penalty of $300,000

IA-5008 In the Matter of Holthouse Carlin & Van Trigt LLP
Failure to comply with Reg S-X auditor independence rules; custody rule violations
Ordered to pay a $300,000 civil penalty. HCVT has also agreed to, for a period of one year, cease any engagements involving audits of fund financial statements under the Custody Rule or of broker-dealer financial statements, any public company audits, or any other assurance service arising from an SEC rule. If HCVT wants to later engage in that line of work, it must retain an independent compliance consultant for a three-year period and certify to the SEC that it has complied with all of the consultant's recommendations regarding the firm's auditor independence practices

IA-5007 In the Matter of Convergex Execution Solutions, LLC, now known as Cowen Execution Services LLC
Failure to submit true and complete data in response to SEC staff Electronic Blue Sheets (EBS) requests, resulting in the reporting of EBS that was incomplete or deficient
Ordered to pay a civil monetary penalty of $2.75 million

IA-5006 In the Matter of Harbour Investments, Inc.
Failure to disclose compensationunder a marketing services agreement with a third-party broker-dealer that provided custody and clearing services; without disclosure, invested some advisory clients in mutual fund share classes with 12b-1 fees when lower cost share classes of the same fund were available; did not implement policies and procedures designed to manage the such conflicts
Ordered to pay disgorgement, prejudgmen interest and a civil monetary penalty of $241,479

LR-24267 SEC v. Gregory Lemelson, Lemelson Capital Management, LLC, and The Amvona Fund
Hedge Fund Adviser Charged with Short-And-Distort Scheme

IA-5005 In the Matter of Brett Thomas Graham
Order Denying Request to Modify Settlement Order

Statement Regarding Staff Proxy Advisory Letters
IM Information Update IM-INFO-2018-02
Division of Investment Management has withdrawn two no-action letters, effective September 13, 2018.
IM-INFO-2018-02 has been added to the IA Act UnwrappedTM Examination Tools Database/2018 Information, linked to the two letters in the No-Action Letter Database and referenced under Regulatory Database Rule 206(4)-6

Evolution Revolution 2018
Annual joint study by the Investment Adviser Association (IAA) and National Regulatory Services (NRS), which is integrated with Accuity.
The full text of the joint study is available through the IA Act UnwrappedTM Examination Tools Database

IA-5004 In the Matter of Crypto Asset Management, LP and Timothy Enneking
SEC Charges Digital Asset Hedge Fund Manager with Misrepresentations and Registration Failures
Ordered to pay a civil monetary penalty of $200,000

IA-5003 In the Matter of Cadaret, Grant & Co., Inc., Arthur Grant, Beda Lee Johnson and Eugene Long
Supervisory Respondents failed reasonably to supervise registered representatives with respect to their recommendations to brokerage customers pertaining to certain non-traditional ETPs
Sanctions include disgorgement, prejudgment interest and civil monetary penalties
Added to the IA Act UnwrappedTM Releases Database; the term "rolling" added to the Glossary & Definitions Database

IA-5002 In the Matter of BB&T Securities, LLC
Failure to adequately disclose to clients facts giving rise to material conflicts of interest; recommended that clients invest in wrap fee programs sponsored by affliate investment adviser with which it had a compensation agreement
Ordered to pay a civil monetary penalty of $100,000

IA-5001 In the Matter of VSS Fund Management LLC and Jeffrey T. Stevenson
Failure to provide the limited partners of a private equity fund it advised  with material information related to a change in value of the fund's assets in connection with an offer by Stevenson, the owner and managing partner of VSS, to purchase the limited partnership interests
Ordered to pay a civil monetary penalty of $200,000

IA-5000 In the Matter of Mark R. Graham, Blue Capital Management, Inc., and Blue Alternative Asset Management, L.L.C.
Fraudulent scheme to conceal declining asset values in various client accounts
For 3 years, Graham is barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and Respondents are ordered to pay disgorgement, prejudgment interest and a civil monetary penalty of $600,000.

IA-4999 In the Matter of Massachusetts Financial Services Company
Advertisements failed to disclose that the Research Proof Chart included quantitative ratings determined by back-testing MFS’s quantitative models; advertisements failed to disclose that the back-tested period contributed to the superior performance of the hypothetical blended portfolio; misleading advertisements were due in part to a failure to adopt and implement adequate compliance policies and procedures
MFS has retained a compliance consultant; and is oredered to pay a civil monetary penalty of $1.9 million

LR-24253 SEC v. Grenda Group, LLC, et al.
IA and Principal charged with fraud relating to association with barred adviser

IA-4996 In the Matter of AEGON USA Investment Management, LLC, Transamerica Asset Management, Inc., et al
Errors in Quantitative Investment Models
Ordered to pay disgorgement, prejudgment interest, and civil monetary penalties totaling $97,602,040
IA-4997 In the Matter of Bradley J. Beman
Berman ordered to pay a civil monetary penalty of $65,000
IA-4998 In the Matter of Kevin A. Giles
Giles ordered to pay a civil monetary penalty of $25,000

IA-4995 In the Matter of First Western Advisors
Untrue disclosures relating to receipt of dompensation from fund companies; Mutual fund share class selection practices and related disclosure failures; Failure to seek best execution; Compliance deficiencies
Ordered to pay disgorgement, prejudgment interest and a civil monetary penalty of $50,000

IA-4994 Delegation of Authority to General Counsel of the Commission
Final Rule
SEC is revising Subpart A, Part 200 of Title 17 with respect to the delegations of authority to the Commission’s General Counsel.

IA-4993
In re: Pending Administrative Proceedings
In light of the Supreme Court's decision in Lucia v. SEC, the SEC had stayed pending adminstrative proceedings; the stay now expires effective Aug. 22, 2018

IA-4992 In the Matter of Jeffrey Scott Davis
In criminal case, convicted of fraud & embezzlement
Barred from association and barred from participating in any offering of a penny stock

IA-4991 In the Matter of Aria Partners GP, LLC
Private Fund Adviser Failed to Implement a Compliance Program; Also Charged with Custody Rule Violations & Inaccurate Form ADV
Ordered to pay a $150,000 civil monetary penalty
Added to the IA Act UnwrappedTM Risks/Significant Cases under Regulatory Database Rules 206(4)-2, 206(4)-7 & 206(4)-8

Investor Roundtables Regarding Standards of Contact for Investment Professionals Rulemaking
Statement by SEC Chairman Jay Clayton
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4990 In the Matter of Biltmore Wealth Management, LLC and Caleb R. Overton
Misled and made misrepresentations to investors, misused investor funds
For 5 years, barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and ordered to pay disgorgement and interest and a civil monetary penalty of $160,000.

IA-4989 In the Matter of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Failed to disclose a conflict of interest arising out of its own business interests in deciding whether to continue to offer clients products managed by an outside third-party advisory firm.
Merrill agreed to pay more than $4 million in disgorgement, $806,981 in prejudgment interest, and a more than $4 million penalty, and to be censured and to cease and desist from further violations.

IA-4988 In the Matter of Roger T. Denha
Cherry-picking scheme
Denha is barred from association, prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and barred from participating in any offering of a penny stock. Denha is also ordered to pay dosgorgement, prejudgment interest and a civil monetary penalty.

IA-4987 In the Matter of BKS Advisors LLC
BKS failed reasonably to supervise Roger Denha and failed to implement adequate policies and procedures designed to prevent allocating trades unfairly
Ordered to pay a civil monetary penalty of $75,000

IA-4986 In the Matter of Citigroup Global Markets Inc., and Citigroup Inc.
CGMI’s failed reasonably to supervise its traders with a view towards preventing mismarking and unauthorized trading in Citi proprietary accounts that ultimately caused CGMI’s books and records, and those of its parent, Citigroup, to be inaccurate.
Ordered to pay over $10 million to settle two enforcement actions involving its books and records, internal accounting controls, and trader supervision.

IA-4985 In the Matter of Ameriprise Financial Services, Inc.
Failed to Safeguard Client Assets - Ameriprise Representatives Engaged in Misconduct that Resulted in the Theft of Client Assets
Ordered to pay a civil penalty of $4.5 million

IA-4984 In the Matter of Lockwood Advisors, Incorporated
Failed to adopt and implement adequate policies and procedures in connection with its assessment, oversight, and disclosure of the trading away practices of the third-party portfolio management firms in its wrap programs
Ordered to pay a civil monetary penalty of $200,000

IA-4983 In the Matter of Hamlin Capital Management, LLC
Charged with Mispricing Cross Trades Between Clients
Hamlin agreed to reimburse $609,172, plus interest, to its affected clients and pay a $900,000 penalty to the SEC.

LR-24231 SEC v. Christopher Collins, et al
SEC Charges U.S. Congressman and Others with Insider Trading

IA-4982 In the Matter of Jinesh P. Brahmbhatt
Failure to disclose conflicts of interest to advisory clients
Barred from association, prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and barred from participating in any offering of a penny stock; ordered to pay disgorgement, prejudgment interest and a civil monetary penalty of $150,000

IA-4981 In the Matter of Ramnik S. Aulakh
Aided and abetted failure to disclose conflicts of interest to advisory clients
Barred from association, prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and barred from participating in any offering of a penny stock; ordered to pay disgorgement, prejudgment interest and a civil monetary penalty of $50,000

IA-4980 In the Matter of Knowledge Leaders Capital, LLC
Used “soft dollars,” to purchase approximately $1 million in research from a firm affiliated with an individual that was, at the time, the Managing Director of Knowledge Leaders and also functioned as its CIO; failed to identify and disclose to clients the financial conflicts of interest created by using soft dollars to pay a company owned and controlled by Knowledge Leaders’ CIO
Company self-reported, restructured its compliance reporting structure, including hiring a new CCO, hired outside counsel and a compliance consultant and developed new policies and procedures to prevent future violations.
Firm will hire an Independent Consultant to conduct a comprehensive review of Respondent’s policies, procedures, and practices related to assessing conflicts of interest and disclosure; and pay a civil monetary penalty of $50,000

IA-4979 In the Matter of Melvin Leonard Wimmer, Jr.
Securities fraud
Barred from association

IA-4978 Regulatory Flexibility Agenda

Charles Schwab & Co., Inc., No-Action Request
Added to the IA Act UnwrappedTM No-Action Letter Database and to Regulatory Database Rule 206(4)-3 No-Action Tab

Public Alert: Unregistered Soliciting Entities (PAUSE)
List of Fictitious Governmental Agencies and International Organizations Associated with Soliciting Entities (updated Aug. 6, 2018)
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

LR-24226 SEC v. Murakami, et al
Final Judgment against Defendants in Hedge Fund Fraud Scheme

IA-4977 In the Matter of Gilbert Fluetsch
Fraud - created vehicle to pool investors' funds for the purpose of purchasing and flipping residential real estate properties; misused funds, resulting in total loss to investors
Barred from association

What's in a Name? Regulation Best Interest v. Fiduciary
Speech by Commissioner Hester M. Peirce
"Best Interest” or “Fiduciary Duty” Standard – Is there a Practical Difference?
Added to the IA Act UnwrappedTM Examination Tools Database/ 2018 Information

IA-4976 In the Matter of Jack Jarrell
Offered and sold unregistered promissory notes; diverted investor proceeds
Barred from association and barred from participating in any offering of a penny stock

IA-4975 In the Matter of Beverly Hills Wealth Management, LLC and Margaret Mulligan Black
Withheld prepaid, unearned advisory fees
BHWM ordered to post entire Order on its website and ordered to pay $100,000 and Black, $50,000, in civil monetary penalties

IA-4974 In re: Pending Administrative Proceedings
Order extending Stay for 30 days

IA-4973 In the Matter of Michael Devlin
Failed to disclose a material conflict of interest and obtain client approval of a transaction in which he had a conflict of interest
For one year, Devlin is barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and ordered to pay a civil monetary penalty of $80,000

LR-24206 SEC v. Temenos Advisory, Inc., and George L. Taylor
IA & CEO charged with putting $19 million of investor money, including elderly investors' retirement savings and pension plans, in risky investments and secretly pocketing hefty commissions from those investments

IA-4972 In the Matter of Joseph Pinkney Davis III
South Carolina Consent Order permanently barred Davis; made unsuitable recommendations to clients and failed to disclose related conflicts of interest
Barred from association

IA-4971 In the Matter of James M. Unger
In criminal case, pled guilty to wire fraud, filing false tax returns and misappropriating client funds; embezzlement
Barred from association and barred from participating in any offering of a penny stock

IA-4970 In the Matter of New Silk Route Advisors, LP
Firm violated Custody Rule every year since becoming registered; compliance programs violations
Ordered to pay a $75,000 civil monetary penalty
Added to the IA Act UnwrappedTM Releases Database and  the Risks/Significant Cases Tabs under Regulatory Database Rules 206(4)-2 & 206(4)-7

IA-4969 In the Matter of Cornelius Peterson
In civil case, pled guilty to investment adviser fraud, conspiracy, and bank fraud; Peterson along with a co-conspirator misappropriated the retirement savings of clients for their own personal use
Barred from association and barred from participating in any offering of a penny stock

LR-24205 SEC  v. John Geraci
Asset Manager charged with stealing client assets and due diligence failures; accused of perpetuating lies about his portfolio manager's investment performance and assets under management, and for stealing approximately $1 million of client funds.

IA-4968 In the Matter of Norman M.K. Louie and Mount Kellett Capital Management, LP
Conflict of interest disclosure violations arising from an undocumented and undisclosed $3 million dollar loan
Louie ordered to pay a civil monetary penalty of $100,000; Mount Kellett ordered to pay a civil monetary penalty of $160,000

IA-4967 In the Matter of John B. Engebretson
In civil action, convicted of fraudulent trade allocation "cherrypicking" that harmed advisory clients
Barred from association

Compliance Issues Related to Best Execution by Investment Advisers 
OCIE National Exam Program Risk Alert (July 11, 2018)
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4960 In the Matter of Oaktree Capital Management, L.P.
IA-4959 In the Matter of EnCap Investments, L.P.
IA-4958 In the Matter of Sofinnova Ventures, Inc.
Pay to Play Rule 206(4)-5 violations
Censured and ordered to pay civil monetary penalties varying from $100,000 to $500,000

LR-24192 SEC v. Tarek D. Bahgat, Lauramarie Colangelo, and WealthCFO LLC
Misappropriated money from investment advisory clients; Colangelo impersonated clients to obtain control of accounts
Court imposed $7,500 civil penalty against Colangelo, litigation is continuing

IA-4966 In the Matter of Ralph Willard Savoie
In Louisiana case, pled guilty to fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4965 In the Matter of Romano Brothers & Company
Violated Advisers Act testimonial rule 206(4)-(1)(a)(1) by publishing two videos containing client testimonials about Romano Brothers and the advice and services it renders
Censured, ordered to pay a civil monetary penalty of $15,000
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Cases under Regulatory Database Advertising Rule 206(4)-1

IA-4964 In the Matter of Leonard S. Schwartz
As a mareting consultant, Schwartz was a cause of four registered investment advisers’ violations of the testimonial rule under the Advisers Act when he collected and published on the internet on behalf of each of them advertisements containing testimonials concerning the investment advisers and the investment advice and services they rendered
Ordered to pay a $35,000 civil monetary penalty

Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Cases under Regulatory Database Advertising Rule 206(4)-1

IA-4963 In the Matter of HBA Advisors, LLC, and Jaime Enrique Biel
HBA’s violations and Biel’s causing HBA’s violations of the testimonial rule
HBA ordered to pay a civil penalty of $15,000 and Biel to pay a penalty of $10,000

IA-4964 In the Matter of HBA Advisors, LLC, and Jaime Enrique Biel
HBA’s violations and Biel’s causing HBA’s violations of the testimonial rule
HBA ordered to pay a civil penalty of $15,000 and Biel to pay a penalty of $10,000

LR-24189 SEC v. Charles Schwab & Co., Inc.
Failed to Report Suspicious Transactions
Ordered to pay a $2.8 million civil penalty

IA-4956 In the Matter of Eugene Terracciano
AML compliance failures while Terracciano was the AML Compliance Officer at Aegis Capital; failed to file SARs
Ordered to pay a civil monetary penalty of $20,000

IA-4955 In the Matter of Roger S. Zullo
In a Massachusetts case, Zullo was permanently barred. Zullo used false suitability information on annuity and account applications and documentation in selling unsuitable and disproportionately large variable annuities to his clients. These sales provided significant commissions.
Zullo is barred from association and barred from participating in any offering of a penny stock.


IA-4954 In the Matter of Michael Johnson
Insider trading
Barred from association; prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and prohibited from participating in any offering of a penny stock
Ordered to pay disgorgement, prejudgment in terest and a civil monetary penalty in the same amount as the disgorgement

LR-24187 SEC v. The Owings Group, LLC, et al.
Owings Group & Others Charged in $5 Million Offering Fraud

Regulation of Investment Advisers by the U.S. Securities and Exchange Commission  
Robert E. Plaze, Partner, Proskauer Rose, LLP (June 2018 update)
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information & linked to Regulatory Database Plain English Description Tabs

IA-4953 In the Matter of Morgan Stanley Smith Barney LLC (MSSB)
Failure to adopt policies and procedures reasonably designed to prevent MSSB personnel from misusing and misappropriating funds in client accounts
Ordered to pay a civil monetary penalty of $3.6 million

IA-4952 In the Matter of THL Managers V, LLC and THL Managers VI, LLC
Inadequate disclosures by private equity fund adviser THL regarding THL’s potential future receipt of lump sum fees from the portfolio companies of two THL-managed private equity funds. Because its receipt of accelerated fees from portfolio companies posed at least a potential conflict of interest as between it and the funds, THL could not effectively consent to this practice on behalf of the funds, causing a breach of fiduciary duty.
Respondents must pay disgorgement, prejudgment interest and a civil monetary penalty.

IA-4951 In the Matter of Aisling Capital LLC
Venture Capital Fund Adviser Charged for Failing to Offset Consulting Fees
Ordered to pay a $200,000 penalty

IA-4950 In the Matter of Bruce A. Hauptman and Grand Teton Capital Management, LLC
IA and Pricipal Charged with Misappropriating Client Funds
Barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; ordered to pay disgorgement and prejudgment interest and a civil monetary penalty of $160,000

IA-4949 In the Matter of Jon B. Schmidhammer
In criminal case, pled guilty to unlawful securities practices, a second degree felony.
Barred from association and barred from participating in any offering of a penny stock

IA-4948 In the Matter of Paul Edward "Ed" Lloyd Jr.
Order Cancelling Oral Argument

IA-4947 In the Matter of Wells Fargo Advisors, LLC
Settled SEC Charges for Improper Sales of Complex Financial Products
Misconduct Imposed Substantial Costs on Retail Customers

IA-4946 In re: Pending Administrative Proceedings
In light of the Supreme Court’s decision in Lucia v. SEC, the Commission has decided to stay any pending administrative proceeding initiated by an order instituting proceedings that commenced the proceeding and set it for hearing before an ALJ, including any such proceeding currently pending before the SEC. The stay is effective immediately and shall remain operative for 30 days or further order of the SEC.

IA-4945 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Order Rescheduling Oral Argument

LR-24172 SEC v. Santillo, et al
SEC Shuts Down $102 Million Ponzi Scheme
Asset freeze and temporary restraining order, investigation is continuing

IA-4944 In the Matter of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch Admits to Misleading Customers about Trading Venues
Censured and ordered to pay a $42 million penalty

IA-4942 In the Matter of Bryan Lee Addington
In criminal case convicted of wire fraud
Public hearing ordered

LR-24166 SEC v. Ronald A. Fossum, Jr. and Alonzo R. Cahoon
Washington-Based IA Settles Charges of Multi-Million Dollar Scheme

IA-4943 In the Matter of Ronald A. Fossum, Jr.
Fossum engaged in multiple fraudulent and deceptive acts, including misrepresenting the financial condition of the funds, misstating management compensation, misappropriating fund assets for personal expenses, and commingling fund assets.
Barred from association and barred from participating in any offering of a penny stock
*(waiting SEC confirmation on Release #, erroneously published as IA-33122)

IA-4941 In the Matter of William Jordan
In connection with the sale of limited liability company interests and promissory notes to advisory clients, misrepresented the use of investor proceeds, overstated asset values, paid excessive management fees and bonuses, failed to conduct audits or reviews of the funds’ financial statements as required by the offering documents, had undisclosed conflicts of interest, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors
Barred from association

IA-4940 In the Matter of Eric Erb
In criminal case, pled guilty to wire fraud, sentenced to 57 months in prison and ordered to pay $5.4 million in restitution
As principal and CCO, had misappropriated client funds
Barred from association

Investment Advisers Act
Amended by Public Law 115-141

IA Act UnwrappedTM Advisers Act Sec. 205 Investment Advisory Contracts - text has been updated to reflect recent amendments

IA-4939 In the Matter of Larry Werbel
In criminal case, convicted of conspiracy to commit securities fraud
Barred from association

IA-4938 In the Matter of Richard W. Kessler
In a New Mexico Securities Division case, barred from association for engaging in a number of prohibited business practices
Public hearing ordered

IA-4937 In the Matter of Blackrock Advisors, LLC, Blackrock Financial Management, Inc., and Blackrock Fund Advisors
Order granting exemption from Rule 206(4)-5
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 206(4)-5 NoAction and Exemptive Request Tab

IA-4935 In the Matter of Gary W. Freeman
Cherrypicking
Barred from association, barred from participating in any offering of a penny stock and ordered to pay disgorgement, prejudgment interest and a civil monetary penalty

Updates to Custody Rule Frequently Asked Questions
Division of Investment Management Information Update
Added to the IA Act UnwrappedTM Examination Tools Database and to Regulatory Database Rule 206(4)-2 Description and Disclosure Tabs

IA-4936 In the Matter of Christopher C. Burtraw
In jury trial, convicted of theft
Barred from association and barred from participating in any offering of a penny stock

IA-4934 In the Matter of Barbara A. Endres
Colorado Division of Securities had entered a state level bar against Endres for placing elderly clients' funds into an unsuitable, highly speculative strategy without disclosing the risks; made unauthorized trades in non-discretionary customer accounts and improperly retained pre-paid advisory fees after clients terminated services
Barred from association

IA-4933 In the Matter of DeVere USA, Inc.
SEC Charges Investment Adviser and Two Former Managers for Misleading Retail Clients

Added to the IA Act UnwrappedTM Releases Databases and to the Risks/Significant Cases Tab under Regulatory Database Rule 206(4)-7

IA-4932 In the Matter of Lyxor Asset Management, Inc.
IA Settles Charges for Failing to Disclose Conflict of Interest Arising from Side Letter with Third Party Advisers

LR-24154 SEC v. Gustavo A. Guzman
Judgment against Former Trading Instructor for Defrauding Private Fund Investors

The Why behind the No
SEC Commissioner H. Peirce - Remarks at the 50th Annual Rocky Mountain Securities Conference
Philosophy for the SEC's enforcement program; factors that guide her consideration of enforcement recommendations; and several practices that give pause when reviewing enforcement actions
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

IA-4931 In the Matter of Veteri Place Corporation
IA-4030
In the Matter of Rose Park Advisors
IA-4929 In the Matter of RLJ Equity Partners, LLC
IA-4928 In the Matter of Prescott General Partners LLC
IA-4927 In the Matter of HEP Management Corporation
IA-4926 In the Matter of Elm Partners Management LLC 
IA-4925 In the Matter of Ecosystem Investment Partners LLC 
IA-4924 In the Matter of Cherokee Investment Partners LLC 
IA-4923 In the Matter of CAI Managers & Co., L.P. 
IA-4922 In the Matter of Bristol Group, Inc. 
IA-4921 In the Matter of Brahma Management, Ltd. 
IA-4920 In the Matter of Biglari Capital LLC 
IA-4919 In the Matter of Bachrach Asset Management Inc. 

These Orders are for violations of the reporting provisions of Advisers Act Rule 204(b)-1 that requires certain investment advisers with at least $150 million in private fund assets under management to file and periodically update a report on Form PF to provide information about the private funds they manage. The firms were subject to the reporting requirements of Rule 204(b)-1, but failed to file or update a report on Form PF.
Added to the IA Act UnwrappedTM Releases Databases and to Regulatory Database Rule 204(b)-1 Risks/Significant Cases Tab

IA-4918 In the Matter of Frank H. Chiappone, et al
Order Granting Requests to File Briefs

IA-4917 In the Matter of 1112 Partners, LLC
Order granting exemption under Advisers Act Section 202(a)(11)(H)
Added to the IA Act UnwrappedTM Releases Database and to the No-Action/Exemptive Order Tab under Regulatory Database Rule 202(a)(11)(G)-1 Family Offices

IA-4916 In the Matter of Gregory M. Bercowy
Participated in a scheme to manipulate a penny stock security
Public hearing ordered

IA-4915 In the Matter of Perry A. Gruss
Gruss, CFO of D.B. Zwirn & Co., LP, improperly transferred monies between client funds in order to allow one of the client funds to fund its investments and also to repay its revolving credit facility
Gruss is barred from association for 3 years

IA-4914 In the Matter of Aberon Capital Management, LLC and Joseph Krigsfeld
Misrepresentations and omissions by Aberon and Krigsfeld concerning the assets and performance of a hedge fund; received excessive advisory fees from ACMF based on those inflated asset valuations
Krigsfeld is barred from association, prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, and ordered to pay a civil monetary penalty; Aberon is censured

IA-4913 In the Matter of Tibor Klein
Insider trading
Barred from association

IA-4912 BlackRock Advisors, LLC, et al.
Notice of Application for Exemptive Order
Added to the IA Act UnwrappedTM Regulatory Database Pay to Play Rule 206(4)-5 No-Action/Exemptive Request Tab

Edmunds Private Capital, LLC
Application for Exemptive Order
Added to the IA Act UnwrappedTM Regulatory Database Family Office Rule 202(a)(11)(G)-1 NoAction/Exemptive Request Tab

LR-24142 SEC v. William M. Jordan
SEC Charges California IA in Multi-Million Dollar Fraud

NASAA 2018 Investment Adviser Section Annual Report
First annual report identifying the contours of the state-registered investment adviser population and the related regulatory activities of state securities regulators
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4911 In the Matter of Yasuna Murakami
Fraud - misused investor assets
Barred from association

South State Advisory, Inc. (SSA)
No-Action Relief under Rule 206(4)-1 the Advertising Rule
Added to the IA Act UnwrappedTM No-Action Letters Database and to Regulatory Database Advertising Rule 206(4)-1 No-Action Tab

LR-24138 SEC v. Premium Point Investments, LP et al.
Hedge Fund Adviser Charged with Inflating Fund Performance

IA-4910 In the Matter of Steven Ku
IA-4909 In the Matter of Visium Asset Management, LP
Asset Mismarking & Insider Trading - CFO Charged with Failing to Supervise Portfolio Managers
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Cases under Regulatory Database Rules 206(4)-7 & 206(4)-8

LR-24135 SEC v. Murakami, et al
Hedge fund manager sentenced 6 years in prison and ordered to pay $10,520,634 in restitution for defrauding hedge fund investors

The Evolving Market for Retail Investment Services and Forward-Looking Regulation — Adding Clarity and Investor Protection while Ensuring Access and Choice
Remarks by SEC Chairman Jay Clayton, Temple University, Philadelphia
The Importance of our Retail Investment Market; Issues that Require Attention; How Do We Address These Issues?
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

Remarks at the PLI Investment Management Institute 2018
Dalia Blass - Director, Division of Investment Management
Standards of Conduct for Investment Professionals, Regulation Best Interest, and Liquidity Risk Management
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

IA-4908 In the Matter of Paul W. Smith
Misappropriated client funds, in civil case convicted of securities fraud and wire fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4904 Auditor Independence with Respect to Certain Loans or Debtor-Creditor Relationships
Proposing Release
Proposed amendments to Rule 2-01 of Regulation S-X
The SEC is proposing to amend its auditor independence rules to refocus the analysis that must be conducted to determine whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client at any time during an audit or professional engagement period. The proposed amendments would focus the analysis solely on beneficial ownership rather than on both record and beneficial ownership; replace the existing 10 percent bright-line shareholder ownership test with a “significant influence” test; (3) add a “known through reasonable inquiry” standard with respect to identifying beneficial owners of the audit client’s equity securities; and (4) amend the definition of “audit client” for a fund under audit to exclude funds that otherwise would be considered affiliates of the audit client. The Commission is also requesting comment on certain other potential amendments to its auditor independence rules.

IA-4907 In the Matter of Daniel H. Glick, CPA
Fraud, misappropriated client funds, Ponzi-like scheme
Barred from association and barred from participating in any offering of a penny stock

IA-4906 In the Matter of Winter, Kloman, Moter & Repp, S.C., Curtis W. Disrud, CPA, and Paul R. Sehmer, CPA,
Compliance Programs Rule and Custody Rule violations
Were not independent accountants, engaged in improper professional conduct; failed to: design and implement an appropriate response to the risk of material misstatement,  obtain sufficient appropriate audit evidence; ensure that the engagement team had adequate technical training and proficiency; establish sufficient quality control standards; conduct the necessary engagement quality reviews and receive concurring approvals; and failed to  exercise due professional care.
WKMR, Disrud and Sehmer and are denied the privilege of appearing or practicing before the Commission as an accountant for one to two years and are ordered to pay disgorgement, prejudgment interested and civil monetary penalties
Added to the IA Act UnwrappedTM Releases Database and to the Risks/Significant Cases Tab under Regulatory Database Custody Rule 206(4)-2

IA-4905 In the Matter of Gary Yin
In criminal case, pled guilty to one count of conspiracy to commit offenses. Yin knowingly and willfully agreed with Jing Wang and his brother, Bing Wang, to conceal Jing Wang’s insider trading and control of the proceeds of insider trading by corruptly obstructing a Commission investigation of Qualcomm and its executives, including Jing Wang, and by knowingly conducting unlawful transactions with the proceeds of Jing Wang’s insider trading.
Barred from association and barred from participating in any offering of a penny stock

IA-4897 In the Matter of Aegis Capital, LLC, Circle One Wealth Management, LLC, Diane W. Lamm, Strategic Consulting Advisors, LLC and David. I Osunkwo
The proceedings against SC Advisors are dismissed

LR-24133 SEC v. Paul W. Smith
Broker Charged With Defrauding Investors by SEC Sentenced to More Than Five Years in Prison in Parallel Criminal Case

IA-4903 In the Matter of Lauramarie Colangelo
Aided and abetted villations of misappropriating money from advisory clients' brokerage accounts
Barred from association

Share Class Selection Disclosure Initiative (updated May 1, 2018) 
SEC Division of Enforcement Share Class Selection Disclosure Initiative FAQs (updated May 1, 2018)
Share Class Selection Disclosure Initiative QUESTIONNAIRE for Self-Reporting Advisers 
Share Class Selection Disclosure Initiative QUESTIONNAIRE ATTACHMENT for Self-Reporting Advisers
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4902 1112 Partners, LLC
Notice of Application for Exemptive Order
Applicant requests that the Commission issue an order declaring it to be a person not within the intent of Section 202(a)(11) of the Advisers Act, which defines the term “investment adviser.” The Applicant is a recently-formed, multi-generational single-family office that provides or intends to provide services to the family and descendants of William Render Ford. The Applicant is wholly-owned by Family Clients and is exclusively controlled (directly and indirectly) by one or more Family Members and/or Family Entities in compliance with Family Office Rule 202(a)(11)(G)-1.
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 202(a)(11)(g)-1 No-Action/Exemptive Order Tab

IA-4901 In the Matter of Kevin Hamilton
In criminal case, convicted of securities fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4894 In the Matter of Jeremy R. Lundin
In criminal case, convicted of mail fraud and money laundering; made false statements to investors, engaged in fraud and deceit on investors
Barred from association

IA-4900 In the Matter of Howard B. Present
Made materially false and misleading statements about the AlphaSector strategy, the flagship product of F-Squared, and its advertised performance; performance had been back-tested; final judgment entered against Present in a civil action.
Barred from association.

IA-4899 In the Matter of Ikenna Ikokwu
In connection with the sale of FutureGen securities, Ikokwu misled his clients and customers by failing to disclose compensation received from FutureGen for each sale, falsely claiming that he had performed extensive due diligence into FutureGen, and touting his personal and family investments in FutureGen-related entities while failing to disclose that his largest investment was delinquent; acted as unregistered broker-dealers by receiving commissions for the sale of FutureGen securities.
Barred from association and barred from participating in any offering of a penny stock.

IA-4898 In the Matter of Christopher M. Lee a/k/a Rashid K. Khalfani
Misappropriated investor funds, touted his qualifications while soliciting investors, but concealed from investors his alias and criminal records, including his conviction for felony grand theft; and otherwise engaged in a variety of conduct that operated as a fraud and deceit on investors; sold unregistered securities, signed and filed false Forms ADV on CCB’s behalf, and aided and abetted CCB’s improper registration with the Commission as an investment adviser.
Public hearing ordered

IA-4896 In the Matter of WCAS Management Corporation
IA Charged for Breach of Fiduciary Duty - Failed to disclose conflicts of interest to the fund investors, and could not effectively consent on behalf of its private equity fund clients.
Ordered to pay disgorgement, prejudgment interest and a civil penalty of $90,000
Added to the IA Act UnwrappedTM Release Database and to Regulatory Database Rule 206(4)-8 Risks/Significant Cases Tab

LR-24120 SEC v. Scott Newsholme
Judgment against IA for Defrauding Clients

IA-4895 In the Matter of Martin Shkreli
In criminal case, convicted of securities fraud
Barred from association

LR-24118 SEC v. Daniel H. Glick, et al
IA Settles SEC Charges for Fraudulent Scheme and Is Sentenced to 151 Months in Prison in Related Criminal Case

IA-4893 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Supplemental Briefing Order

IA-4892 In the Matter of Mark P. French
In criminal case convicted of wire fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4891 In the Matter of Frank H. Chiappone, Andrew G. Guzzetti, William F. Lex, Thomas E. Livingston, Brian T. Mayer, and Philip S. Rabinovich
Order Scheduling Briefs

IA-4890 In the Matter of Steven M. Simmons
Fraud
Barred from association

IA-4889 Proposed Commission Interpretation Regarding Standard of Conduct for Investment  Advisers; Request for Comment on Enhancing Investment Adviser Regulation
The SEC is  publishing for comment a proposed interpretation of the standard of conduct for investment  advisers under the Advisers Act.  The  Commission also is requesting comment on: licensing and continuing education requirements for  personnel of SEC-registered investment advisers; delivery of account statements to clients with  investment advisory accounts; and financial responsibility requirements for SEC-registered  investment advisers, including fidelity bonds.
Comments must be received within 90 days after publication in the Federal Register.

IA-4888 Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail Communications and Restrictions on the use of Certain Names or Titles
Proposing Release IA-4888, proposed new Rules 204-5 and 211h-1 and proposed amendments to Rules 203-1, 204-1 and 204-2 are reflected in the IA Act UnwrappedTM Regulatory Database.

IA-4887 In the Matter of Saving2Retire, LLC and Marian P. Young
Order Granting Petition for Review and Scheduling Briefs

IA-4886 In the Matter of Scott Newsholme
In criminal case, pled guilty to wire fraud.
Barred from association and barred from participating in any offering of a penny stock.

IA-4885 In the Matter of Arlington Capital Management, Inc. and Joseph F. LoPresti
Issued Misleading Advertisements
Arlington ordered to pay a civil monetary penalty of $125,000 and LoPresti ordered to pay a civil money penalty of $75,000

LR-24114 SEC v. Amrit J. S. Chahal
Ponzi scheme

IA-4884 In the Matter of Michael S. Moses
Default judgment in civil case, guilty of misrepresenting Moses’ past experience as a trader or portfolio manager with large private fund advisers; the past investment performance obtained through Moses’ investment strategy; the safety of investments in a private fund; and  Moses’ personal investment in the Fund to raise approximately money from investors.
Barred from association

Overview of the Most Frequent Advisory Fee and Expense Compliance Issues Identified in Examinations of Investment Advisers
National Exam Program Risk Alert (April 12, 2018)
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

LR-24109 SEC v. Capital Cove Bancorp LLC and Christopher M. Lee aka Rashid K. Khalfani
Court Orders California Firm and Founder Charged with Defrauding Investors to Pay over $3.8 Million

IA-4883 In the Matter of Laura Pendergest-Holt
In connection with the sale of certificates of deposit offered by SIB to the SGC customers, Holt misled investors and others who communicated directly with investors to believe that SIB’s multi-billion dollar portfolio of assets was managed by a global network of portfolio managers and monitored by a team of SFG analysts in Memphis, Tennessee, which she supervised; did not disclose all information about assets to the investors. In criminal case, pled guilty to obstruction of justice.
Barred from association.

IA-4882 In the Matter of Troy C. Baldridge
Misappropriated client funds
Barred from association

LR-24103 SEC v. Ikenna Ikokwu, et al
SEC Obtains Final Judgment against IA & Companies for Defrauding Clients

IA-4881 In the Matter of Caleb J. Preston
IA-4880 In the Matter of Charles G. Preston,
IA-4879 In the Matter of Tobias J. Preston
C.J. Preston, T. Preston,  and C. Preston, and their affiliated investment advisory entity, MMC-FL, defrauded investors in a pooled investment fund; made false statements regarding assets; and acted as an unregistered broker
C. J. Preston is barred from association and barred from participating in any offering of a penny stock
C. G. Preston is barred from association

IA-4878 In the Matter of PNC Investments, LLC
IA-4877 In the Matter of  Geneos Wealth Management, Inc.
IA-4876 In the Matter of Securities America Advisors, Inc.
Three investment advisers have settled charges for breaching fiduciary duties to clients and generating millions of dollars of improper fees in the process; Series of failures in connection with its mutual fund share class selection practices and its receipt of revenue sharing payments

IA-4875 In the Matter of Clayborne Group, LLC and Dean. A. Heinemann
Improperly registered with the SEC as an IA; custody rule violations; recordkeeping rule violations; false statements in Form ADV filings
Heinemann is for 12 months suspended from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; ordered to pay a civil monetary penalty of $20,000

IA-4874 In the Matter of Joshua D. Mosshart
In civil action, convicted of engaging in a fraudulent and unregistered securities offering
Public hearing ordered

LR-24094 SEC  v. Michael Scronic
IA charged with engaging in Ponzi-like scheme

LR-24093 SEC v. Mohammed Ali Rashid
Former Private Equity Firm Partner Charged with Secretly Billing Clients for His Vacations and Salon Visits

IA-4873 In the Matter of Ajenifuja Investments, LLC
Order Granting Hearing on Cancellation and Scheduling Filing of Statements

1112 Partners, LLC - Exemptive Request
Amendment #3 to Application for Exemption under Rule 202(a)(11)(G)-1, the Family Office Rule
Added to the IA Act UnwrappedTM Regulatory Database Rule 202(a)(11)(G)-1 No-Action and Exemptive Requests Tab

LR-24089 SEC  v. Kirbyjon Hines Caldwell et al., Shae Yatta Harper
SEC Charges Prominent Pastor, Financial Planner in Scheme to Defraud Elderly Investors

IA-4872 In the Matter of ZPR Investment Management, Inc.
Order Imposing Civil Monetary Penalty

IA-4871 In the Matter of Larry C. Grossman
Order in Response to Remand
Grossman had argued a five-year statute of limitations. The September 30, 2016 order is reinstated except for the part of that order requiring him to pay $3,004,180.65 in disgorgement and $757,853.75 in prejudgment interest.

IA-4870 In the Matter of Howard B. Present
MA Disctrict Court found that Present (CEO of F-Squared) made materially false and misleading statements about the AlphaSector strategy, the flagship product of F-Squared, and its advertised performance. Present falsely claimed advertised performance was based on actual performance of real clients’ investments when in fact, the performance had been back-tested; further the advertised performance was substantially overstated due to a calculation error.
Admininstrative proceedings instituted; public hearing ordered

In the Matter of Apollo Management, LP
Application for Exemption from Rule 206(4)-5
Added to the IA Act UnwrappedTM Regulatory Database Rule 206(4)-5 NoAction/Exemptive Request Tab

LR-24077 SEC  v. Howard B. Present
Court Orders Former F-Squared CEO to Pay Over $13 Million

LR-24076 SEC v. McKinley Mortgage Co. LLC, et al.
SEC Charges Operators of Private Real Estate Fund with Scheme to Defraud Retail Investors

LR-24071 SEC v. Nicholas J. Genovese, Willow Creek Investments, LP, and Willow Creek Advisors, LLC
Preliminary Injunction against Purported Hedge Fund Manager Charged with Conducting an Ongoing Fraud

ICI 2018 Mutual Funds and Investment Management Conference
Dalia Blass - Director, Division of Investment Management Keynote Address
Topics include: Information & Analysis; Analytics Office's MAGIC tool; Update on the Fund Board Outreach Initiative; ETFs; Index Providers

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Division of Investment Management - Expanded Use of Draft Registration Statement Review Procedures for Business Development Companies  
Division will accept for nonpublic review draft initial registration statements that are submitted by BDCs under '34 Act Section 12(b)  and also accept for nonpublic review draft registration statements relating to offerings under the '33 Act that are submitted by BDCs within one year of an initial offering or of an initial registration under '34 Act Section 12(b).
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4869 Regulatory Flexibility Agenda

IA-4868 In the Matter of Voya Investments, LLC and Directed Services, LLC
Voya Advisers Agree to Repay Clients and Settle Charges that They Failed to Disclose Securities Lending Conflict

IA-4864 In the Matter of Valor Capital Asset Management, LLC and Robert Mark Magee
Fraudulent “cherry-picking” scheme; Magee disproportionately allocated profitable or less unprofitable trades from Valor’s omnibus trading account to his personal accounts, while disproportionately allocating unprofitable or less profitable trades to client accounts.
Magee is barred from association; prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; and ordered to pay disgorgement, prejudgment interest and a civil monetary penalty.

IA-4867 Order Cancelling Registrations of Certain Investment Advisers
No requests for hearings were requested regarding the SEC's Notice of Intention to Cancel Registrations of Certain IAs (See Release No. IA-4849); the registration of each registrant has been cancelled.

IA-4866 In the Matter of DMS Advisors, Inc.
IA-4865 In the Matter of Peter R. Kohli
DMS Advisors and Peter Kohli solicited investors to invest in mutual funds but used the money for other purposes; to conceal this fraud, sent investors fake financial statements, made materially false statements in soliciting the sale of the securities
DMS Advisors' IA registration is revoked; Kohli is barred from association and barred from participating in any offering of a penny stock

LR-24061 SEC  v. Stefan Lumiere
SEC Bars Hedge Fund Manager Charged In Asset Management Mismarking Scheme

IA-4863 In the Matter of Financial Fiduciaries, LLC and Thomas Batterman
Non-disclosure of financial conflicts of interest
created by arrangement with third party and violations of the custody rule
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Enforcement Cases under Rule 206(4)-2, the Custody Rule

IA-4862 In the Matter of Ameriprise Financial Services, Inc.
Ameriprise disadvantaged certain retirement plan customers by failing to ascertain that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain mutual funds when less expensive share classes were offered to these Eligible Customers by Ameriprise on its platform. Ameriprise did so without disclosing that it would receive greater compensation from the purchases of the more expensive share classes.
Ameriprise voluntarily identified the Eligible Customers who purchased more expensive shares than those shares for which they were eligible, and has completed full remediation for those customers
Ordered to pay a civil monetary penalty of $230,000

IA-4861 In the Matter of Stefan Lumiere
In criminal case, found guilty of engaging in a fraudulent scheme to falsely inflate the value of securities, causing the fund to report falsely inflated returns, overstating its net asset value, misclassifying certain distressed assets, and overpay management and performance fees
Barred from association

IA-4860 In the Matter of Janney Montgomery Scott, LLC
The exemption from the written disclosure and consent requirements of Advisers Act
§206(3) requested by Applicant is granted, effective immediately, subject to the terms and conditions contained in the application.
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 206(3)-2 No-Action Tab/Exemptive Orders

IA-4859 In the Matter of Steven Zoernack and EquityStar Capital Management, LLC
Advisers Act
§§206(1), (2) & (4) violations; Rule 206(4)-8 violations
Misrepresented and omitted material facts about Zoernack’s background; used false and misleading info to gain a Five-Star Morningstar Listing; made misleading statements about fund's performance; misused investor funds
Barred from association and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; ordered to pay disgorgement;
Commission forgoes a civil penalty and prejudgment interest in light of Respondent's 60 month prison sentence

IA-4858 In the Matter of Stephen M. Hicks
Misappropriated investor funds - fraudulently caused two new hedge funds to pay legal expenses incurred by three older hedge funds, in litigation to which they themselves were parties, and then by purporting to compensate the new funds with illiquid securities rather than cash
Barred from association

IA-4857 In the Matter of Commonwealth Advisors, Inc., and Walter A. Morales
In civil case, found guilty of engaging in a scheme to hide losses in certain hedge funds.
Morales is barred from association and Commonwealth's IA registration is revoked.

LR-24054 SEC v. Strong Investment Management, et al
IA & Senior Officers charged in fraudulent cherry-picking scheme;
CCO "abdicated" compliance responsibilities and ignored red flags

Commission Statement & Guidance on Public Company Cybersecurity Disclosures 
Release Nos. 33-10459; 34-82746 - Interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks & incidents

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

LR-24052 SEC v. Daniel Thibeault, et al.
Relief Defendant in Fraud Case Against Massachusetts IA Ordered to Pay Over $500,000

LR-24050 SEC v. Commonwealth Advisors, Inc. and Walter A. Morales
Hedge fund manager hid losses from investors
Morales is barred from association and ordered to pay a $130,000 penalty; Commonwealth Advisors' IA registration is revoked.

LR-24049 SEC v. Southridge Capital Management LLC, et al
Defendants illegally diverted investor money for use by other hedge funds that were illiquid and in need of cash
Hedge fund manager and firms ordered to pay nearly $13 mil

2018 Compliance Outreach Program National Seminar for IA & IC CCOs
Registration for the Seminar is open but in-person attendance is limited to 500; the April 12th Program will also be webcast live on the SEC's website
The Agenda has been posted in the IA Act UnwrappedTM Examination Tools Database/2018 Information

Share Class Selection Disclosure Initiative
SEC's Division of Enforcement will recommend that the Commission accept favorable settlement terms for investment advisers that self-report to the Division possible securities law violations relating to their failure to make necessary disclosures concerning mutual fund share class selection.
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-4856
In the Matter of Thomas J. Buck
Impermissibly exercised discretion when placing certain trades in certain customer accounts without obtaining authorization from the customer and made material misrepresentations and omissions to customers and investment advisory clients regarding the fees or commissions charged in their accounts.
Barred from association.

IA-4855 In the Matter of Victor M. Dandridge, III
In criminal case, pled guilty to wire fraud; misappropriated client funds
Barred from association and barred from participating in any offering of a penny stock

OCIE 2018 National Exam Program Priorities
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

IA-4854 In the Matter of Banc One Investment Advisors Corporation and Mark A. Beeson
Order Modifying 2004 Order Instituting Administrative Proceedings

IA-4853 In the Matter of Michael S. Moses
In criminal case, SEC's complaint alleged Moses and MIC misrepresented 1) Moses’ past experience as a trader or portfolio manager with large private fund advisers, 2) the past investment performance obtained through Moses’ investment strategy, 3) the safety of investments in a private fund, and 4) Moses’ personal investment in the Fund to raise money from investors
Public hearing ordered

IA-4852 In the Matter of Wedbush Securities, Inc.
Violations of the Customer Protection Rule - Wedbush’s weekly Rule 15c3-3 calculations to determine the net amount that should have been deposited into the Reserve Account included a significant error, resulting in weekly Reserve Account deficiencies
Wedbush will retain qualified independent consultant(s) to conduct a comprehensive review of the firm's current system of controls and procedures for: compliance with the net capital and customer protection rules; liquidity; opening of, and due diligence relating to, new correspondent and prime services accounts; and internal audit and risk management; pay disgorgement and prejudgment interest amd a civil monetary penalty of $1 million plus post-order interest.

LR-24038 SEC  v. Nicholas J. Genovese, Willow Creek Investments, LP, and Willow Creek Advisors, LLC
SEC Halts Ongoing Fraud by Purported Hedge Fund Manager

LR-24037 SEC v. James S. Polese, et al
Two Boston-based IAs charged with defrauding multiple clients by stealing nearly half a million dollars of client assets, along with other breaches of their fiduciary duty. In a parallel action, the U.S. Attorney's Office for the District of Massachusetts announced criminal charges.

IA-4851 In the Matter of Mohlman Asset Management, LLC and Louis G. Mohlman, Jr.
Engaged in conflicted transactions; made material misstatements and omissions concerning those transactions to investors; improperly used fund assets; filed inaccurate Forms ADV; had a deficient compliance program.
Barred from association for two years

IA-4850 Janney Montgomery Scott LLC; Notice of Application
Notice of application for an exemptive order under Advisers Act Sec. 206A providing an exemption from the written disclosure and consent requirements of Sec. 206(3) that would be similar to relief provided by Advisers Act Rule 206(3)-3T, which expired by its terms on December 31, 2016. The relief sought by the Applicant, if granted, would be subject to conditions similar to those under the Rule.
Release added to the IA Act UnwrappedTM Releases Database, and the term "Discretion" added to the Glossary & Definitions Database

IA-4849 Notice of Intent to Cancel Certain IA Registrations
IAs listed have not filed Form ADV amendments as required by Rule 204-1, or have indicated that they are no longer eligible to remain SEC-registered but have not filed Form ADV-W.

Private Funds Statistics (2017 Q2)  
Issued by the Division of Investment Management Analytics Office (Jan. 17, 2018)
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information, and to the Plain English Description Tab under Regulatory Database Rule 204(b)-1

IA-4848 In the Matter of AmericaFirst Capital Management, LLC, Rick A. Gonsalves, and Robert L. Clark
Advisers Act
§206(2) violations
Disclosure violations while selling promissory notes to individual retail investors, including the firm’s advisory clients
AFCM Agreed to certain compliance undertakings and Respondents must pay civil monetary penalties

LR-24029 SEC v. Daniel H. Glick, et al
Operator of Investment Scheme Involving Seniors Pleads Guilty

IA-4847 In the Matter of Gemini Fund Services, LLC
Advisers Act §§206(1) & (2) violations
Transmitted fake inflated net asset values (NAVs)
Will retain an Independent Compliance Consultant; pay disgorgement, prejudgment interest and a civil monetary penalty of $400,000

SEC's Operations Plan under a Lapse in Appropriations and Government Shutdown
Added to the IA Act UnwrappedTM Examination Tools Database - 2018 Information

IA-4846 In the Matter of John V. Bivona
Misappropriated investor funds for personal use
Barred from association; barred from participating in any offering of a penny stock

IA-4845 In the Matter of Frank G. Mazzola
Diverted investor funds for personal use - Improperly associated with IA during colateral bar and participated in the offer and sales of securities without the necessary registration or exemption from registration for those offers and sales
Barred from association and barred from participating in any offering of a penny stock

IA-4844 In the Matter of John Tarpinian
Undisclosed principal trades while he was associated with a dually registered IA/BD; engaged in trades between a brokerage proprietary trading account and advisory client accounts, without first providing written disclosure that that he was effecting the trades as a principal or obtaining client consent
Ordered to pay disgorgement, prejudgment interest and a civil monetary penalty of $50,000

IA-4843 In the Matter of Anthony P. Chiera and Jeffrey R. Belfiore
Insider trading
Chiera agreed to pay disgorgement, prejudgment interest and a civil monetary penalty, as well as to an associational and penny stock bar with a right to reapply after four years. Belfiore agreed to pay a $25,000 penalty and to be barred from acting as an officer or director of a public issuer for a period of four years.

IA-4842 Adjustments to Civil Monetary Penalty Amounts
Annual Notice of Inflation Adjustments
These amounts are effective beginning on January 15, 2018

IA-4841 In the Matter of James C. Tao
Made false and misleading statments, failed to act in the best interest of his clients; Ponzi scheme
Barred from association and barred from participating in any offering of a penny stock

IA-4840 In the Matter of Donna Boyd
Violated Exchange Act
§15(a) by selling away from her associated registered broker and acting as an unregistered broker
Barred from association and barred from participating in any offering of a penny stock

IA-4839 Amendments to Investment Advisers Act Rules to Reflect Changes Made by the FAST Act
Final Rule Release
Pending amendments reflected in IA Act UnwrappedTM Regulatory Database Rules 203(l)-1 & 203(m)-1

IA-4838 In the Matter of PNC Capital Advisors, LLC
Order granting exemption from Rule 206(4)-5(a)(1)
Added to IA Act UnwrappedTM Regulatory Database Rule 206(4)-5 No-Action/Exemptive Request Tab

IA-4837 In the Matter of Khaled "Kal" Bassily
LR-24023 SEC v. Khaled "Kal" Bassily
Participated in a fraudulent scheme to conceal from transition management customers the routine practice of routing their orders for the purchase or sale of securities to an offshore affiliate, which would take substantial mark-ups and mark-downs, which customers incurred in addition to the disclosed commissions they paid
Barred from association; ordered to pay over $975,000

IA-4836 In the Matter of LKL Investment Counsel, LLC and Mark H. Love
Compliance-related deficiencies, misrepresentations in Forms ADV, and failure to produce documents to SEC exam staff
Ordered to comply with certain undertakings, subject to limitations and prohibitions on compliance-related activities, and ordered to pay civil monetary penalties

LR-24022 SEC v. Gaughran, et al
Attorney & Accountant Charged with Aiding/Abetting IA's $9 Mil Theft from Charity Client

IA-4835 In the Matter of Train, Babcock Advisors, LLC
Misappropriated investor funds; failed to comply with Custody & Compliance Programs Rules; made false statements on Forms ADV
Agreed to file Form ADV-W withdrawing registration; ordered to pay disgorgement, prejudgment interest and a civil monetary penalty

IA-4834 In the Matter of Southwind Associates of NJ Inc., William Scott Villafranco, and Anthony LaPeruta
Recordkeeping, Custody, Compliance Programs and Reg S-P violations
LaPeruta is subject to limitations on his activities; Southwind and Villafranco are ordered to pay a civil monetary penalty

IA-4833 In the Matter of Team Financial Asset Management, LLC, Team Financial Managers, Inc., and James L. Dailey
Misrepresentations & omissions concerning material changes in the investment strategy of a fund that led to catastrophic losses and the ultimate collapse of the fund.
Barred from association and ordered to pay disgorgement, prejudgment interest and a civil monetary penalty

IA-4832 In the Matter of Packerland Brokerage Services, Inc., and Atlas Capital Management Corp.
Disclosure & best execution failures related to the selection of a particular class of mutual fund shares by Packerland and Atlas; Form ADV misrepresented that Packerland would disclose to clients all of its fees and any compensation it received for the sale of securities; compliance programs rule violations
Ordered to pay disgorgement, prejudgment interest, and civil monetary penalties

IA-4831 In the Matter of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Failed to Comply With Anti-Money Laundering Laws
Ordered to pay a civil monetary penalty of $13 million

IA-4830 In the Matter of TPG Capital Advisors, LLC
Inadequate disclosures that involved a breach of fiduciary duty by private equity fund adviser; Compliance Programs Rule violations
Commission considered the cooperation afforded the Commission staff after TPG was contacted. Throughout the investigation, TPG voluntarily and promptly provided documents and information, met with the staff on multiple occasions and provided detailed factual summaries of relevant information, was extremely prompt and responsive in addressing staff inquiries.
Ordered to pay disgorgement and prejudgment interest

IA-4829 In the Matter of Matrix Capital Markets, LLC and Nicholas M. Mitsakos
Made false & misleading statements to prospective investors and financial institutions in order to raise funds for investment vehicles to be managed by Matrix and Mitsakos, included lying about investment returns, assets under management, and broker and auditor relationships; misappropriated investor funds.
Mitsakos is barred from association and barred from participating in any offering of a penny fund

LR-24019 SEC  v. Stephen C. Peters, VisionQuest Wealth Management, LLC, VisionQuest Capital, LLC, and VQ Wealth, LLC
Ponzi Scheme

LR-24017 SEC  v. Ronald A. Fossum, Jr. and Alonzo R. Cahoon
IA & Business Partner Charged in Multi-Million Dollar Scheme

IA-4828 In the Matter of Courtlin L. Holt-Nguyen
LR-24018 SEC v. Matrix Capital Markets, LLC, Nicholas M. Mitsakos and Courtlin L. Holt-Nguyen
Prepared false & misleading statements regarding investment returns that were included in written marketing materials t were sent to prospective investors and financial institutions in order to raise funds for investment vehicles to be managed by Matrix and its principal
Barred from association

LR-24014 SEC v. Justin D. Meadlin and Hyaline Capital Management, LLC
Judgments on Consent against IA and Co-Founder; Co-Founder Barred from Securities Industry

LR-24011 SEC  v. Louis G. Mohlman, Jr., et al
IA Charged with Fraudulently Engaging in Conflicted Transactions and Misleading Investors

IA-4827 In the Matter of Justin D. Meadlin
Induced clients to invest through fraudulent misrepresentations and material omissions; disseminated emails to prospective investors and clients, which materially inflated Hyaline’s AUM; touted a fictitious quantitative fund in email solicitations; published false historical performance returns
Barred from association for 5 years
Added to IA Act UnwrappedTM Regulatory Database Rule 206(4)-1 - Risks/Significant Cases Tab

IA-4826 In the Matter of Coastal Equities, Inc., and Coastal Investment Advisors, Inc.
IA & BD Failed to Supervise Former President
Added to the IA Act UnwrappedTM Regulatory Database - Rule 206(4)-7 Significant Cases

LR-24007 SEC v. Westport Capital Markets, LLC and Christopher E. McClure
IA & Principal Charged with Enriching Themselves at the Expense of Clients

ICI Securities Law Developments Conference - Keynote Address 
Dalia Blass Director, Division of Investment Management
Added to the IA Act UnrwappedTM Examination Tools Database - 2017 Information

IA-4824 In the Matter of Institutional Investor Advisers, Inc.
IA-4823
In the Matter of Hortner Investment Management, LLC
IA-4822 In the Matter of Ameriprise Financial Services, Inc.
Violations resulting from reliance on F-Squared documents that contained material misstatements
Censured and fined

LR-24003 SEC v. James C. Tao and Donna Boyd (f/k/a Donna Chen)
Financial Adviser Settles Charges for Defrauding Private Equity Fund Investors

IA-4821 In the Matter of William P. Carlson, Jr.
In criminal case, pled guilty to participating in a scheme to obtain money and property from an advisory client by means of materially false and fraudulent pretenses and representations and by concealing material facts
Barred from association

IA-4820 In the Matter of Paritosh Gupta, Adi Capital Management LLC, Nehal Chopra, and Ratan Capital Management, LP
Improper sharing of confidential information and advice – obtained via position as a senior research analyst with a hedge fund adviser

IA-4819 In the Matter of Brahman Capital Corp.
Supervisory & compliance failures by hedge fund adviser

IA-4818 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Order Cancelling Oral Argument

IA-4817 In the Matter of Paul Leon White, II
Corrected Order Dismissing Review Proceeding; Notice of Finality of Initial Decision

IA-4816 In re: Pending Administrative Proceedings
SEC Ratifies Appointment of Administrative Law Judges

IA-4815 In the Matter of Lynn Tilton, Patriarch Partners, LLC, et al
Initial Decision has become final

IA-4814 In the Matter of ZPR Investment Management Inc.
Order Scheduling Briefs

IA-4813 In the Matter of Hartford Investment Financial Services, LLC, et al
Order Modifying 2006 Order - Amended Offer of Settlement

IA-4812 In the Matter of Gray Financial Group, Inc., Laurence O. Gray, and Robert C. Hubbard, IV
Recommended, offered and sold investments in a Gray Financial proprietary fund of funds to public pension clients; these investments did not comply with the restrictions on alternative investments imposed by Georgia law; made material misrepresentations
Gray Financial has agreed to not act as an investment adviser; Gray and Hubbard are temporarily barred from association

IA-4811 In the Matter of Lawrence E. Penn, III
In criminal case pled guilty to Grand Larceny; engaged in a fraudulent scheme to misappropriate approximately $9 million from a private equity fund in order to provide additional assets to spend on his business and personal expenditures
Public hearing ordered

FY 2017 Enforcement Results
Enforcement Division Report on Priorities and FY 2017 Results
Added to the IA Act UnwrappedTM Examination Tools Database

IA-4810 In the Matter of Stephens Inc.
Order Granting Exemption from Rule 206(4)-5

Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 206(4)-5 No-Action Tab, Exemptive Requests

IA-4804 In the Matter of Donald F. Lathen, Jr., Eden Arc Capital Management, LLC, et al
Notice that Initial Decision has become final

LR-23984 SEC v. Jay Costa Kelter
Charged with Defrauding Retirees

IA-4809 In the Matter of Patric Ken Baccam
Fraud
Public hearing ordered

IA-4808 In the Matter of Paul Edward "Ed" Lloyd, Jr. CPA
Order Rescheduling Oral Argument

IA-4807 In the Matter of Paul H. Ellison
Solicited investors, misrepresented and concealed the identity of the other Aptus principal, who was a convicted felon and disbarred attorney
Barred from association and barred from participating in any offering of a penny stock

IA-4806 In the Matter of James P. Kolf
Ponzi scheme - sold unregistered securities
Barred from association and barred from participating in any offering of a penny stock; state registrations permanently revoked

IA-4805 In the Matter of Tamer F. Moumen
Fraud
Barred from association

IA-4803 In the Matter of UBS Financial Services
Firm disadvantaged customers by failing to ascertain that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain mutual funds when less expensive share classes were available; did so without disclosing that it would receive greater compensation from purchases of the more expensive share classes
Firm must make reasonable additional efforts to attempt to complete distribution of approximately $617,490; ordered to pay a civil monetary penalty of $3,500,000

IA-4802 In the Matter of Kenneth P. Krueger
Cherrypicking - disproportionately allocated day trades to personal accounts
Barred from association and barred from participating in any offering of a penny stock; ordered to pay disgorgement and prejudgment interest and pay a civil monetary penalty of $80,000

IA-4801 In the Matter of Canterbury Consulting, Inc.
Failure to supervise a former managing director and minority owner associated with Canterbury, who engaged in fraudulent trade allocations – “cherry-picking"; did not adopt and implement policies and procedures reasonably designed to prevent preferential trade allocations, and did not meet record keeping requirements relating to distributing the firm’s Form ADV Part 2 to clients
Ordered to pay disgorgement, prejudgment interest, and a civil monetary penalty

IA-4800 In the Matter of Augustine Capital Management, LLC, John T. Porter and Thomas F. Duszynski, CPA
Respondents Caused Fund to Engage in Conflicted Transactions without Disclosing the Conflict and Obtaining Consent; Improperly Charged Investors for ACM’s Expenses; Concealed Losses and Bankruptcies from Investors; Provided False Account Statements; Denied Investor Redemption Requests and Prevented Investor Exits from the Fund
Barred for 3 years, ordered to pay disgorgement, prejudgment interest and civil monetary penalties

Securities Industry and Financial Markets Association (SIFMA)
No-Action Relief under Advisers Act Sec. 202(a)(11)
Temporary No-Action Relief for BDs Receiving Payments for Research from Investment Managers Subject to MiFID II
Added to the IA Act UnwrappedTM No-Action Letters Database

Investment Company Institute
No-Action Relief under Advisers Act Sec. 206
Request for No-Action Relief for Advisers to Aggregate Client Orders
Added to the IA Act UnwrappedTM No-Action Letters Database

IA-4799 In the Matter of Brian J. Keenan
In criminal case, pled guilty to Grand Larceny - misappropriated assets from client accounts to pay for personal expenses
Barred from association

IA-4798 In the Matter of Kevin J. Amell
In criminal case, pled guilty to securities fraud, currently incarcerated
Barred from association

IA-4797 Stephens Inc.
Notice of Application for Exemptive Order under Rule 206(4)-5(e)
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 206(4)-5 Pay to Play - No-Action/Exemptive Order Tab

LR-23970 SEC v. John H. Rogicki
IA/CCO Charged with Stealing $9 Million from Charitable Foundation

IA-4796 In the Matter of Brandon P. Long
Misled investors into believing that he and his recommended investments were affiliated with or approved by the federal government and/or the Thrift Savings Plan; failed to disclose the significantly higher annual fees and surrender charges and opened accounts with his BD without the investor’s knowledge or consent.
Barred from association and barred from participating in any offering of a penny stock

IA-4795 In the Matter of Jeffrey S. Preston
Recommended that  clients invest  in unsecured promissory notes issued by a real estate company. despite the fact that, the firm's attorney had cautioned him about the “enormous risk” of such an investment; falsely reassured clients that their principal would be safe while minimizing, and  failing to disclose, significant risks
Barred from association

IA-4794 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Order Changing Location of Oral Argument

IA-4793 In the Matter of Mark Megalli
Insider trading
Public hearing ordered

IA-4791 FAST Act Modernization and Simplification of Regulation S-K
Proposing Release added to the IA Act UnwrappedTM Releases Database
Proposed revisions reflected in IA Act UnwrappedTM Regulatory Database Rule 0-6

IA-4792 In the Matter of Sam Sadeghi
Insider trading
Barred from association

IA-4790  In the Matter of Danny S. Hood
In civil action the SEC alleged, in connection with the sale of annuities, Hood used documents that caused investors to believe that he and his recommended investments were affiliated with or approved by the federal government and/or the Thrift Savings Plan; failed to disclose the significantly higher annual fees associated with the investments and opened accounts with his BD without the investor’s knowledge or consent.
Barred from association and barred from participating in any offering of a penny stock

IA-4789 Semi-Annual Regulatory Flexibility Agenda

IA-4788 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Order rescheduling oral argument

IA-4787 In the Matter of John Austin Gibson, Jr.
Notice that Initial Decision has become final

IA-4786 In the Matter of GL Capital Partners, LLC and GL Investment Services, LLC
Notice that Initial Decision has become final

IA-4785 In the Matter of William D. Bucci
Notice that Initial Decision has become final

LR-23961 SEC v. Richard G. Cody
IA indicted for fraud and for lying to the SEC

IA-4784 In the Matter of Edward D. Jones & Co., L.P.
Order granting exemption from the written disclosure and consent requirements of section 206(3) of the Act to permit Applicant to engage in principal trading with nondiscretionary advisory client accounts subject to the terms and conditions contained in its application.
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 206(3)-2 No-Action/Exemptive Orders Tab

LR-23959 SEC  v. Tweed Financial Services, Inc. et al
Adviser Charged with Sending False and Misleading Account Statements to Investors

IA-4783 In the Matter of Paul Leon White, II
Order Dismissing Review Proceeding and Notice of Finality

IA-4782 In the Matter of Jeffrey Timothy Kluge
In criminal case, convicted of bank fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4781 In the Matter of Perry H. Beaumont
IA-4780 In the Matter of SIX Financial Information USA, Inc.
Financial Services Firm and Former Valuation Expert Settle with SEC for Deceiving Client about Valuation Work
SIX agreed to pay disgorgement, prejudgment interest, and a civil penalty of $75,000 into a Fair Fund. The SEC will make a payment of $43,330 to the investment firm to reimburse it for the fees it paid for the services it never received. Beaumont agreed to be barred from the securities industry with a right to reapply after one year, and to pay a civil penalty of $50,000.

LR-23951 SEC  v. Tarek D. Bahgat, Lauramarie Colangelo, and WealthCFO LLC
IA Charged with Stealing Money from Clients

Information Regarding Regulatory Relief for Hurricane Victims
Added to the IA Act UnwrappedTM Regulatory Database - Rules 204-1 and 204-3 Disclosure & Recordkeeping Tabs

ID-1182 In the Matter of Lynn Tilton; Patriarch Partners, LLC. et al
Initial Decision dismisses charges concerning Respondents’ operation of three collateral loan obligation funds, known as the Zohar Funds

IA-4779 In the Matter of Avaneesh Krishnamoorthy
In criminal case, pled guilty to securities fraud; insider trading
Barred from associaiton and barred from participating in any offering of a penny stock

Testimony on Oversight of the SEC  
SEC Chairman Jay Clayton - Before the Senate Committee on Banking, Housing and Urban Affairs
Added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information

IA-4778 In the Matter of VisionPoint Advisory Group, LLC
Failed to disclose that its owner and IA Reps received forgivable loans of more than $1.3 million and additional non-forgivable loans from a BD that provides clearing and custody services for VisionPoint’s advisory clients - did not disclose the loans or the conflict of interest arising from this compensation in SEC filings or to clients
Sanctioned - ordered to pay a civil moentary penalty of $45,000

IA-4777 In the Matter of 360 Financial, Inc.
Failed to disclose to clients that it received a forgivable loan of $446,356 from a BD and a separate non-forgivable loan from a broker that provides clearing and custody services for 360 Financial’s advisory clients - did not disclose the loan or the conflict of interest arising from this compensation in SEC filings or to clients.
Sanctioned - ordered to pay a $40,000 civil monetary penalty

IA-4776 In the Matter of TRH Financial LLC
Failed to disclose to clients that it received a forgivable loan of almost $350,000 from a BD that provides clearing and custody services for TRH’s advisory clients - did not disclose the loan or the conflict of interest arising from this compensation in SEC filings or to clients.
Sanctioned - ordered to pay a $35,000 civil monetary penalty

IA-4775 In the Matter of Brian J. Keenan
In criminal case, pled guilty to misappropriating client assets for personal use
Public hearing ordered

IA-4774 In the Matter of Aletheia Research and Management, Inc.
Cherry-picking; Codes of Ethics Failures
Investment Adviser Registration Revoked
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Cases under Regulatory Database Rule 204A-1, Codes of Ethics

IA-4773 In the Matter of Marshall G. Eichenauer, Jr. and Sagent Wealth Management, LLC
Used money invested in a fund they managed to finance loans that personally benefitted Eichenauer

LR-23941 SEC v. Moses Investment Company, LLC and Michael S. Moses
IA & Owner Charged with Lying about Experience and Past Performance

IA-4772 In the Matter of Platinum Equity Advisors, LLC
Charged three private equity fund clients about $1.8 million more than it should have in broken deal expenses
Platinum consented to the entry of a cease-and-desist order and agreed to pay a total of $1,902,132 in disgorgement and prejudgment interest and a $1.5 million civil penalty

Statement on Cybersecurity  
SEC Chairman Clayton Discloses the Commission’s Cyber Risk Profile, Discusses Intrusions at the Commission, and Reviews the Commission’s Approach to Oversight and Enforcement 
Added to the IA Act UnwrappedTM Examination Tools Database/2017 Information

LR-23939 SEC  v. Francisco Illarramendi, et al.
United States v. Illarramendi
Final judgment against 8 entities used to perpeptrate multimillion dollar Ponzi scheme

IA-4771 In the Matter of George Russell Thorenson
scheme to manipulate the reported share price and volume of Abakan, Inc. common stock
Barred from association and barred from participating in any offering of a penny stock

IA-4770 In the Matter of Mark A. Gomes
Scalping
Barred from association for 5 years and ordered to pay a civil monetary penalty

IA-4769 In the Matter of Suntrust Investment Services, Inc.
Breached fiduciary duty to its advisory clients, made inadequate disclosures that failed to explain certain conflicts of interest, and had deficiencies in compliance policies and procedures in connection with its mutual fund share class selection processes
Pay disgorgement plus pre-penalty interest and pay a civil monetary penalty

The Most Frequent Advertising Rule Compliance Issues Identified in OCIE Exams of IAs
OCIE National Exam Program Risk Alert
Added to the IA Act UnwrappedTM Examination Tools Database/2017 Information and to Regulatory Database Rule 206(4)-1, the Advertising Rule

 

Headline News

Risk-Based Examination Initiatives Focused on Registered Investment Companies
Read more...

Investor Testing of the Proposed Relationship Summary for IAs & BDs
Form CRS - Research Report
Read more...

Denial of Resources Undermined Effectiveness of IA’s Compliance Program Resulting in Compliance Failures
CCO's warnings were ignored
Read more...

SEC Enforcement Division Issues Report on FY 2018 Results
Read more...

Investment Adviser Compliance Issues Related to the Cash Solicitation Rule
OCIE National Exam Program Risk Alert
Read more...

SEC’s New Strategic Plan Puts Investors, Innovation, and Performance at Top
Read more...

Updates

Brightline Solutions updates IA Act UnwrappedTM on a daily basis. Recent updates are listed below. Click HERE for a more detailed summary of the information.

Costumes, Candy, and Compliance
SEC Commissioner Hester M. Peirce - Remarks at the NSCP 2018 National Membership Conference
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information and to the Risks Tab under Regulatory Database Rule 206(4)-7

IA-5064 In the Matter of Eldrick E. Woodley d/b/a Woodley & Co. Wealth Strategies

IA-5063 In the Matter of Douglas P. Simanski

Risk-Based Examination Initiatives Focused on Registered Investment Companies 
National Exam Program OCIE Risk Alert

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Investor Testing of Form CRS Relationship Summary
SEC’s Office of the Investor Advocate Research Report
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Industrial Alliance, Investment Management Company
No-Action Letter under Advisers Act Sec. 203(a)

IA-5062 In the Matter of Mark A. Elste

IA-5061 In the Matter of Pennant Management, Inc.

IA-5060 In the Matter of Brett Thomas Graham

IA-5059 In the Matter of Todd Elliott Hitt

LR-24334 SEC v. Douglas P. Simanski

Enforcement Division Annual Report - FY18
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

LR-24324 SEC v. Alexander C. Burns, et al

IA-5058 In the Matter of Michael B. Rothenberg

IA-5057 In the Matter of John H. Rogicki

SEC Strategic Plan 2018 - 2022
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-5056 In the Matter of Ross B. Shapiro

LR-24312 SEC v. Ross B. Shapiro, Michael A. Gramins and Tyler G. Peters

From the Data Rush to the Data Wars: A Data Revolution in Financial Markets
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Remedies and Relief in SEC Enforcement Actions

Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

Testimony on “Oversight of the SEC’s Division of Investment Management”
Added to the IA Act UnwrappedTM Examination Tools Database/2018 Information

IA-5055 In the Matter of Paul T. Rampoldi

IA-5054 In the Matter of LendingClub Asset Management, LLC, Renaud Laplanche, and Carrie Dolan

IA-5053 In the Matter of Lawrence Allen Deshetler

LR-24291 SEC v. Goldsky Asset Management, LLC and Kenneth Grace

IA-5052 In the Matter of Gary Bernard Ross

IA-5051 In the Matter of Ismail Elmas

IA-5050 In the Matter of Putnam Investment Management, LLC and Zachary Harrison

IA-5049 In the Matter of Leroy "Lee" K. Young

IA-5048 In the Matter of Voya Financial Advisors, Inc.

IA-5047 In the Matter of Hudson Housing Capital, LLC
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Enforcement Cases under Regulatory Database Rules 206(4)-2 & 206(4)-7

IA-5046 In the Matter of Thomas J. Caufield

IA-5045 In the Matter of Todd Wortman

IA-5044 In the Matter of Dawn Roberts

IA-5043 In the Matter of MAry A. Faher

IA-5042 In the Matter of Cory Ryan Williams

LR-24285 SEC v. Hope Advisors, LLC, et al.

LR-24283 SEC v. Jason W. Galanis, et al.

IA-5041 In the Matter of Ophrys, LLC

IA-5040 In the Matter of Joel N. Burstein

Sixth action arising out of enforcement initiative to combat cherry-picking led by the SEC's Los Angeles Regional Office:
LR-24278 SEC v. World Tree Financial, LLC, et al.

IA-5039 In the Matter of Travis A. Branch

IA-5038 In the Matter of Karen Bruton, CPA and Hope Advisors, LLC

Orders vacating bars:
IA-5032 In the Matter of Wing F. Chau
IA-5031 In the Matter of Terry M. Deru
IA-5030 In the Matter of Evan Andrew Zarefsky
IA-5029 In the Matter of Anthony Scolaro
IA-5028 In the Matter of James R. Holdman
IA-5027 In the Matter of Matthew G. Teeple
IA-5026 In the Matter of James E. Putman
IA-5025 In the Matter of Walter J. Clarke
IA-5024 In the Matter of Enrica Cotellessa-Pitz
IA-5023 In the Matter of Paul T. Mannion, Jr. and Andrew S. Reckles
IA-5022 In the Matter of Phillip Dennis Murphy
IA-5021 In the Matter of Karl Motey
IA-5020 In the Matter of Daniel Moshe Naeh
IA-5016 In the Matter of Frank R. Peperno
IA-5015 In the Matter of Matthew Crisp
IA-5014 In the Matter of John J. Bravata and Antonio M. Bravata

IA-5037 In the Matter of Susan E. Walker

IA-5036 In the Matter of Jennifer R. Johnson

IA-5035 In the Matter of Creative Planning, Inc. and Peter A. Mallouk
Added to the IA Act UnwrappedTM Releases Database and to Significant Cases under Regulatory Database Rule 204A-1 Code of Ethics & Rule 206(4)-1 Advertisements

LR-24270 SEC v. Thomas J. Caufield

IA-5034 In the Matter of Heidi Wivolin

IA-5033 In the Matter of John L. Gathright, Jr.

Orders vacating bars from association:
IA-5019 In the Matter of Douglas F. Whitman
IA-5018 In the Matter of I. Joseph Massoud
IA-5017 In the Matter of Brian Scott Zwerner
IA-5013 In the Matter of Matthew Adam Rothman
IA-5012 In the Matter of Frances M. Guggino
IA-5011 In the Matter of Edward L. Maggiacomo, Jr.