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.

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

IA-4768 In the Matter of Howarth Financial Service, LLC, and Gary S. Howarth
IA-4767 In the Matter of Jeremy A. Licht d/b/a/ JL Capital Management
Cherry-picking
Licht, Howarth and Howarth Financial Services agreed to the entry of cease-and-desist orders and to pay disgorgement, prejudgment interest and civil penalties. Licht and Howarth also agreed to be barred from the securities industry.

IA-4766 In the Matter of Potomac Asset Management Company, Inc. and Goodloe E. Byron, Jr.
Sanctions for improper allocation of fees and expenses to two private equity fund clients
PAMCO’s Improper Use of Fund Assets to Pay Portfolio Company Fees; Failure to Offset Advisory Fees; Improper Use of the Funds’ Assets to Pay Adviser-Related Expenses; Material Omissions in Forms ADV Concerning PAMCO’s Compensation; Violation of the Custody Rule by Failing to Disclose Related Party Transactions in the Funds’ Audited Financial Statements in Violation of GAAP; Failure to Make Timely Capital Contributions to the Funds; Failure to Adopt and Implement Reasonably Designed Compliance Policies and Procedures
Censured and ordered to pay a $300,000 civil monetary penalty

IA-4765 In the Matter of Gary Yin
In criminal case convicted of insider trading
Public hearing ordered

IA-4764 In the Matter of Envoy Advisory, Inc.
Breaches of fiduciary duty, inadequate disclosures, and compliance deficiencies
Must pay disgorgement, prejudgment interest and a civil monetary penalty

IA-4763 In the Matter of Mike Lundy a/k/a/ Barkley J.W. Lundy
Solicited funds from his clients to purportedly acquire municipal bonds, but misappropriated funds for his personal benefit and to pay prior investors
Barred from association

IA-4762 In the Matter of Steven C. Scudder
In criminal case, pled guilty to wire fraud - Scudder devised, executed, and participated in a scheme to defraud investors and to obtain money and property owned by and under the custody and control of investors, by means of materially false and fraudulent pretenses, representations, and promises, and the non-disclosure and concealment of material facts.
Barred from association

IA-4761 In the Matter of Larry C. Grossman
Order Scheduling Briefs

IA-4760 In the Matter of James Y. Lee
Notice that Initial Decision has become final

IA-4759 In the Matter of Hans Peter Black and Interinvest Corp., Inc.
Notice that Initial Decision has become final

LR-23919 SEC v. Sonya D. Camarco, Camarco Investments, Inc. and Camarco Living Trust
Asset Freeze against Former Broker Charged with Stealing Client Funds

IA-4758 In the Matter of Municipal Finance Services, Inc., Rick A. Smith and Jon G. Wolff
Breach of fiduciary duty
Respondents must pay civil monetary penalties

Complaint 2:17-cv-06204 SEC v. Jeremy Joseph Drake
IA Charged with Defrauding Professional Athlete and His Wife
Added to the IA Act UnwrappedTM Enforcement Case Database

IA-4757 In the Matter of Sylvester King, Jr.
IA-4756 In the Matter of Aaron R. Parthemer
Sold unregistered, illiquid securities; misrepresented and omitted material facts regarding the investments; ignored policies procedures and warnings and instructions not to use personal email for business
King is barred from association and barred from participating in any offering of a penny stock for 3 years
Parthemer - within 35 days of an order lifting the stay in his chapter 7 bankruptcy case - must pay a civil monetary penalty of $160,000

IA-4755 In the Matter of Jeffrey Gainer
In criminal case, pled guilty to sale of unregistered securities
Public hearing ordered

IA-4754 In the Matter of Brian Michael Berger
In criminal case, pled guilty to wire fraud; ordered to pay restitution and currently encarcerated
Public hearing ordered

IA-4753 In the Matter of Martin Shkreli
Shkreli was convicted of securities fraud by: defrauding investors and potential investors in MSMB and MSMB Healthcare through material misrepresentations and omissions relating to  prior performance, assets under management, and misappropriations of fund assets; and conspired to defraud investors and potential investors through material misrepresentations and omissions about the control of unrestricted or “free trading” shares.
Public hearing ordered

IA-4752 In the Matter of Gerardo E. Reyes
Fraud; In criminal case, pled guilty to wire fraud, sentenced to prison for 4 years and ordered to make restitution
Public hearing ordered

IA-4751 In the Matter of Vertical Capital Asset Management, LLC, Gustavo A. Altuzarra, Christopher R. Chase, et al
Fraudulent schemes
VCAM’s investment adviser registration is revoked; Altuzarra & Chase are 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

IA-4750 Edward D. Jones & Co., L.P. - Request for Exemptive Order
Applicant seeks relief from the written disclosure and consent requirements of Advisers Act
§206(3) that would be similar to relief provided by Rule 206(3)-3T, which expired on Dec. 31, 2016.

IA-4749 In the Matter of Deerfield Management Company, L.P.
Advisers Act §204A violations
Failed to establish policies & procedures reasonably designed to prevent the misuse of material, nonpublic information or to address the risks created by its practice of using research firms; did not enforce it policies & procedures
Must pay disgorgement, prejudgment interest and a civil monetary penalty of over $3 million

Staff Responses to Questions about the Pay to Play Rule 
Updated Q&A regarding Capital Acquisition Brokers (CABs) offers no-action relief
FAQs updated under IA Act UnwrappedTM Regulatory Database Rule 206(4)-5 and added to the Examination Tools Database - 2017 Information

IA-4748 In the Matter of Stephen S. Eubanks
Fraud
Barred from association and barred from participating in any offering of a penny stock

IA-4747 In the Matter of Institutional Investors Advisory Company
Breach of fiduciary duty and failure to make adequate disclosures regarding the distribution of investor profits and its conflict of interest regarding a portion of its advisory fees
Respondent undertakes to pay $1,268,536, which represents the amount of profits that the MAA Investors left remaining in the Reserve Fund upon their withdrawal from IIIF, and prejudgment interest thereon of $146,750; in addition Respondent will pay disgorgement, prejudment interest, and a civil monetary penalty of $250,000

IA-4746 In the Matter of Capital Dynamics, Inc.
IA improperly allocated expenses to private equity fund clients; private equity funds it advised paid over $1.2 million in legal and employee expenses
Ordered to pay a $275,000 penalty

IA-4745 In the Matter of David I. Osunkwo
Outsourced CCO Sanctioned, Suspended and Fined for False Form ADV Filings
Relied on Estimates from CIO That Were Not Verified for Accuracy

Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 204-2 Risks/Significant Enforcement Cases

IA-4744 In the Matter of Diane W. Lamm
False Form ADV filings; failed to maintain required books and records; CCO role was outsourced, but Lamm, as COO, still liable

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
Added to the IA Act UnwrappedTM Releases Database and to Regulatory Database Rule 204-2 Risks/Significant Enforcement Cases

LR-23905 SEC v. Southridge Capital Management LLC, et al.
Misappropriated investor funds; illegally diverted investor money for use by other hedge funds that were illiquid and in need of cash
Ordered to pay $7.9 million in disgorgement and prejudgment interest; Hedge fund manager must pay a $5 million penalty

IA-4743 In the Matter of Coachman Energy Partners, LLC, and Randall D. Kenworthy
Firm & CEO failed to adequately disclosemanagement fees and reimbursable management expenses - as a result, overcharged the funds.
Coachman shall pay disgorgement, prejudgment interest, and a civil penalty; Kenworthy shall pay a civil money penalty

Information Update for Advisers Filing Certain Form ADV Amendments
IM Information Update IM-INFO-2017-06 
Addresses how a filer making an unanticipated other-than-annual amendment must respond to new or amended items in Form ADV Item 5 and the related Schedule D sections, based on recent amendments to Form ADV in rulemaking Release No. IA-4509
Added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information, and linked to Regulatory Database Rule 204-1: Form ADV Amendments

IA-4742 In the Matter of Bryan Wayne Anderson
Persuaded investors to invest in a stock option trading program and a real estate development company promising a guaranteed rate of return without risk while using the funds to repay other investors and for personal use
Currently incarcerated; barred from association

IA-4737 In the Matter of Bradley T. Smegal
Fraudulently induced clients to make investments in entities in which he had an undisclosed ownership interest or otherwise controlled the investment vehicle;  in almost every case, hediverted a portion of each investment to his personal account and for his own personal use
Barred from association and barred from participating in any offering of a penny stock

IA-4741 In the Matter of Donald J. Lester
Lester, through his management of Rubicon, negligently caused CFI to purchase assets from another entity managed by Rubicon without consulting any third party or following any accepted valuation methodology in determining the price; failed to disclose potential conflicts of interest as to the transaction, and that his conduct contradicted representations in the CFI offering memorandum that any related transactions would be conducted on an arms-length, fair market value basis and that CFI would invest in cash flow-producing assets.
Barred from association for 5 years

IA-4740 In the Matter of Steven V. McClatchey
Insider trading
Barred from association and barred from participating in any offering of a penny stock

Observations from Cybersecurity Examinations
OCIE National Exam Program Risk Alert
Summary of observations from OCIE's examinations conducted pursuant to the Cybersecurity Examination Initiative
Added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information

IA-4739 In the Matter of Black Diamond Asset Management LLC and Robert Wilson
Fraud - Registered as an investment adviser, claiming on Form ADV that it held over $583 million in assets under management and at least 26 discretionary accounts. In reality, Black Diamond has never obtained any advisory clients, has never held any assets under management, and has never met the minimum requirements for investment adviser registration with the Commission.
Public hearing ordered.

IA-4736 In the Matter of Cadaret, Grant & Co., Inc.
Failure to disclose conflicts of interest arising from the receipt of 12b-1 fees, marketing support payments, and prepaid advisory fees; failure to seek best execution; compliance failures

IA-4735 In the Matter of Lynn Tilton, Patriarch Partners, LLC, et al
Order Denying Motion to Stay Adminstrative Proceeding

IA-4734 In the Matter of Columbia River Advisors, LLC, Benjamin J. Addink and Donald A. Foy
Failed to Disclose Conflicts of Interest; Custody Rule Violations
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Enforcement Cases under Regulatory Database Rule 206(4)-2 Custody

IA-4733 In the Matter of Brian Kimball Case, Bradway Financial, LLC, and Bradway Capital Management, LLC
Violations: Did not qualify for an exemption from registration as an IA; inflated fund's asset valuations; made untrue statements in Form ADV filings; custody rule violations; compliance rule violations; in contracting to earn a performance fee for managing a fund, did not determine that the fund's investors were qualified clients; improper use of fund assets to pay legal fees
Undertakings: will not charge or accept performance fee compensation; will complete 30 hours of compliance training; shall give current and former investors a copy of the Order; shall retain an Independent Compliance Consultant; Case shall not act in a CCO capacity for 3 years; pay a civil monetary penalty of $150,000.
Added to the IA Act UnwrappedTM Releases Database and to Risks/Significant Enforcement Cases under Regulatory Database Rules 203(m)-1, 206(4)-2, 206(4)-7 & 206(4)-8

IA-4732 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA
Order Rescheduling Oral Argument

IA-4731 In the Matter of Enviso Capital, LLC, Ryan Bowers, and Jeffrey LaBerge, CPA
IA Charged with Overstating the Value of Two Private Funds

IA-4730 In the Matter of KMS Financial Services, Inc.
Failed to Disclose Conflict of Interest Arising from Revenue Sharing Arrangement and Failed to Seek Best Execution

LR-23879 SEC v. Charles A. Banks, IV
Judgment against IA Charged with Defrauding Former NBA Basketball Player

IA-4729 In the Matter of Vincent Puma
Fraud/Ponzi scheme
Barred from association

Case No. 16-15322 ZPR Investment Management Inc. and Max E. Zavanelli v. SEC
Petition for Review of a Decision of the SEC - Petition Granted and Remanded in Part and Denied in Part
Court affirms the SEC's sanctions except those imposed for the violations related to the December 2009 newsletter.
Added to the IA Act UnwrappedTM Enforcement Case Database

Regulation of Investment Advisers by the U.S. Securities and Exchange Commission 
 Robert E. Plaze, Partner, Proskauer Rose, LLC (June, 2017 update)
 Source Documents provided by Brightline Solutions, LLC
Added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information, and linked to associated rules within the IA Act UnwrappedTM Regulatory Database

IA-4728 In the Matter of Eric David Wanger
Order Denying Application for Consent to Associate

IA-4727 In the Matter of Charles A. Banks, IV
Made material misrepresentations to, and omitted material information from, an investor
Barred from association

IA-4726 In the Matter of Paramount Group Real Estate Advisor, LLC
Settled negligence-based fraud charges stemming from a transaction in which it owed a fiduciary duty to both sides and breached that duty to one side

IA-4725 In the Matter of Landwin Management, LLC and Martin Landis
Unregistered adviser used assets of a proprietary real estate investment fund in a manner not authorized by the Fund’s operating documents

Updates to Mid-Sized Adviser FAQs
DIM Information Update IM-Info-2017-04
Updated FAQs added to IA Act UnwrappedTM Regulatory Database Rule 203A-1 Plain English Description (Eligibility for SEC Registration) IM Info Update added to the Examination Tools Database - 2017 Information

IA-4724 In the Matter of Bantry Bay Capital, LLC and Timothy F. Sexton, Jr.
Charged excessive advisory fees; misappropriated cleint money for personal expenses; made false representations on Forms ADV; improperly registered with the SEC; violated custody, books & records, and compliance programs rules

IA-4723 In the Matter of John Thomas Capital Management Group, LLC, et al
Order Scheduling Oral Argument

IA-4722 In the Matter of Paul Edward Lloyd, Jr., CPA
Order Scheduling Oral Argument

IA-4721 In the Matter of Resilience Management, LLC, Bassem Mansour and George Ammar
IA and Co-CEO improperly borrowed money from three private equity funds and caused the Funds’ general partners to not make timely capital contributions to the Funds; made misleading statements in the Funds’ capital call notices, limited partnership agreements and audited financial statements; made false entries in books and records to cover up the misuse and improper advancement.
 
IA-4720 In the Matter of Bennett Group Financial Services, LLC and Dawn J. Bennett
Stay Order

IA-4719 In the Matter of James A. Windelmann, Sr., and Blue Ocean Portfolios, LLC
Extension Order

LR-23867 SEC v. Strategic Capital Management, LLC and Michael J. Breton
IA Sentenced in Cherry-Picking Scheme
Placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into the client accounts
Sentenced to two years in prison followed by two years of supervised release, ordered to forfeit funds and pay restitution

IA-4718 In the Matter of Serofim Muroff
Misappropriated and misused millions of dollars of funds invested through the EB-5 Immigrant Investor Program
Barred from association

IA-4716 & IA-4717 In the Matters of Mark C. Northrop, CPA
Offering fraud - secretly charged investors undisclosed fees of either 40% or 50% of the trading profits over-and-above the disclosed fees; made material misrepresentations to investors
Northrop is suspended from appearing or practicing before the Commission as an accountant and is barred from association

IA-4715 In the Matter of James A. Winkelmann, Sr., and Blue Ocean Portfolios, LLC
Order Granting Leave to Adduce Additional Evidence

IA-4714 In the Matter of Paul Leon White, II
Order Granting Motion to Extend Time to Re-File Brief; Denying Reconsideration Request; and Denying Motion for Leave to Make Future Extension Motion

Public Comments from Retail Investors and Other Interested Parties on Standards of Conduct for IAs & BDs
Speech by SEC Chairman Jay Clayton
Added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information

Form ADV FAQs - updated
Updated in the IA Act UnwrappedTM Regulatory Database Registration Rules (203-1 to 203-3) and Form ADV Amendments Rule (204-1) - Disclosure & Recordkeeping Tabs

IA-4713 In the Matter of Abida Khan
Fraud
Barred from association

Macquarie Capital (USA) Inc.
No-Action Request under Rule 206(4)-3
Added to the IA Act UnwrappedTM No-Action Letter Database and to the No-Action Tab under Regulatory Database Rule 206(4)-3 Cash Solicitation

IA-4712 In the Matter of Marc D. Broidy
Misappropriated investor funds
Barred from association

IA-4711 In the Matter of Ronald J. Fernandes
Failed to disclose material conflicts of interest resulting in additional advisory  fees
Barred from association

IA-4710 In the Matter of Laurence I. Balter, d/b/a Oracle Investment Research
Fraud and multiple breaches of fiduciary duty, cherry-picking, misrepresented management fees, caused fund to deviate from its fundamental investment limitations
Barred from association and ordered to pay disgorgement, prejudgment interest, and a civil penalty of $50,000

IA-4709 In the Matter of Paul Leon White, II
Extension Order - Motion to exceed the word limitation for his opening brief is denied

LR-23847 SEC v. Momentum Investment Partners LLC and Ronald J. Fernandez
Final Judgments against IA & CEO for Failure to Disclose Fees to Clients

LR-23845 SEC  v. William J. Wells and Promitor Capital Management LLC
SEC  Obtains Judgment against and Imposes Industry Bar for Securities Fraud

LR-23843 SEC  v. Francisco Illarramendi, et al
Final judgment against former fund manager for perpetrating a years-long scheme to defraud investors, resulting in hundreds of millions of dollars in losses. Currently serving a sentence of 13 years in federal prison after his guilty plea and criminal conviction in a parallel case.

LR-23842
SEC v. Gustavo A. Guzman
Former Trading Instructor Charged with Defrauding Private Fund Investors

IA-4708 In re: Pending Administrative Proceedings
Stay for Administrative Proceedings in Light of Bandimere v. SEC Decision

LR-23837 SEC  v. Murakami, et al.
Hedge Fund Manager Charged with Ponzi Scheme & Fraud

IA-4707 In the Matter of William J. Wells
Securities fraud
Barred from association

IA-4706 In the Matter of Christopher M. Gibson
Order Granting Motion to Strike and Modifying Briefing Schedule

Cybersecurity: Ransomware Alert  
OCIE National Exam Program Risk Alert

U.S. Dept. of Homeland Security Alert TA17-132A - Indicators Associated with WannaCry Ransomware
U.S. Computer Emergency Readiness Team (US-CERT)
Alerts added to the IA Act UnwrappedTM Examination Tools Database - 2017 Information

1112 Partners, LLC - Exemptive Request
Amended Exemptive Request under Rule 202(a)(11)(G)-1, the Family Office Rule
Added to IA Act UnwrappedTM Regulatory Database Rule 202(a)(11)(G)-1 No-Action/Exemptive Request Tab

 

Headline News

SEC Ratifies Appointment of Administrative Law Judges
Read more...

Cellupica Named Deputy Director of the Division of Investment Management
Read more...

Enforcement Division Issues Report on Priorities and FY 2017 Results
Read more...

Senate Banking Committee Approves New SEC Commissioners
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.

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.

LR-24003 SEC v. James C. Tao and Donna Boyd (f/k/a Donna Chen)

IA-4821 In the Matter of William P. Carlson, Jr.

IA-4820 In the Matter of Paritosh Gupta, Adi Capital Management LLC, Nehal Chopra, and Ratan Capital Management, LP

IA-4819 In the Matter of Brahman Capital Corp.

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

IA-4817 In the Matter of Paul Leon White, II

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

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

IA-4813 In the Matter of Hartford Investment Financial Services, LLC, et al

IA-4812 In the Matter of Gray Financial Group, Inc., Laurence O. Gray, and Robert C. Hubbard, IV

IA-4811 In the Matter of Lawrence E. Penn, III

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.

IA-4804 In the Matter of Donald F. Lathen, Jr., Eden Arc Capital Management, LLC, et al

LR-23984 SEC v. Jay Costa Kelter

IA-4809 In the Matter of Patric Ken Baccam

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

IA-4807 In the Matter of Paul H. Ellison

IA-4806 In the Matter of James P. Kolf

IA-4805 In the Matter of Tamer F. Moumen

IA-4803 In the Matter of UBS Financial Services

IA-4802 In the Matter of Kenneth P. Krueger

IA-4801 In the Matter of Canterbury Consulting, Inc.

IA-4800 In the Matter of Augustine Capital Management, LLC, John T. Porter and Thomas F. Duszynski, CPA

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

IA-4798 In the Matter of Kevin J. Amell

IA-4797 Stephens Inc.
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-4796 In the Matter of Brandon P. Long

IA-4795 In the Matter of Jeffrey S. Preston

IA-4794 In the Matter of Paul Edward "Ed" Lloyd, Jr., CPA

IA-4793 In the Matter of Mark Megalli

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