1. On December 29, 2021, the SEC instituted administrative proceedings against Laurence Balter. Balter fraudulently allocated profitable trades to his own accounts to the detriment of several client accounts. Further, Balter falsely told his clients who invested in the Oracle Fund that they would not pay both advisory fees and management fees for the portions of their accounts invested in the Oracle Fund; and, lastly, Balter made trades for the Oracle Fund that deviated from two of its fundamental investment limitations. Balter agreed to pay $489,921 in disgorgement, $10,079 in prejudgment interest, and a $50,000 civil money penalty, for a total of $550,000. https://www.sec.gov/litigation/admin/2021/34-93872.pdf
2. On December 22, 2021, the SEC instituted administrative proceedings against Peachcap Tax & Advisory, LLC (“PCTA”) and David Miller. Miller offered and sold to certain of his advisory clients and others over $4.6 million in limited partnership interests in The Pessego Long Short Fund, LP (the “Fund”). The Fund’s offering documents and other materials provided to prospective investors claimed that the Fund sought to “generate attractive risk-adjusted returns across all market environments while preserving capital,” and that the Fund “utilized a fundamental long/short equity approach that targets a low net exposure as its principal investment strategy.” The Fund engaged in risky trading from the outset that was inconsistent with its stated objectives and strategies. Miller recommended the Fund to certain PCTA advisory clients, including some clients for whom the Fund was an unsuitable investment. Those investors had limited knowledge of investing, limited investment experience, conservative investment objectives, and/or a low risk tolerance. The Fund lost more than 90 percent of its value before closing. Miller was barred and PCTA shall pay a civil money penalty of $135,000. https://www.sec.gov/litigation/admin/2021/33-11020.pdf
3. On December 21, 2021, the SEC instituted administrative proceedings against Nicholas Abbate. The proceedings concern Abbate and his role in assisting others in a course of business that operated as a fraud or deceit upon clients and investors. The fraudulent conduct involved a now-defunct U.S. mutual fund and its registered investment adviser, an offshore mutual fund, and the founder and principal of both funds and the adviser. Abbate agreed to pay a civil money penalty of $30,000. https://www.sec.gov/litigation/admin/2021/33-11019.pdf
4. On December 21, 2021, the SEC announced the appointment of William Birdthistle as Director of the Division of Investment Management. https://www.sec.gov/news/press-release/2021-268
5. On December 20, 2021, the SEC charged Global Infrastructure Management, LLC for failing to properly offset management fees and for making misleading statements about the fees and expenses it charged. Global agreed to pay a $4.5 million penalty to settle the SEC charges and voluntarily has repaid $5.4 million to its affected private fund clients. Global failed to offset certain portfolio company fees against management fees charged to clients, as it was required to do under the offering and governing documents. As a result, clients overpaid millions in additional management fees. The SEC’s order also found that Global provided investors with inconsistent statements about how Global would calculate management fees. https://www.sec.gov/news/press-release/2021-266
6. On December 20, 2021, the SEC announced fraud charges against five Russian nationals for engaging in a multi-year scheme to profit from stolen corporate earnings announcements obtained by hacking into the systems of two U.S.-based filing agent companies before the announcements were made public. The filing agents assist publicly traded companies with the preparation and filing of periodic reports with the SEC, including quarterly reports containing earnings information. Each of the defendants with violating the antifraud provisions of the federal securities laws and related SEC antifraud rules and seeks a final judgment ordering the defendants to pay penalties, return their ill-gotten gains with prejudgment interest, and enjoining them from committing future violations of the antifraud laws. https://www.sec.gov/news/press-release/2021-265
7. On December 20, 2021, the SEC instituted administrative proceedings against 1st Global Advisors, Inc., now known as Avantax Advisory Serrvices Inc. for breaching of fiduciary duty in connection with its affiliated broker’s receipt of third-party compensation for advisory client investments without fully and fairly disclosing its conflicts of interest. 1st Global invested clients in mutual fund share classes that paid 1st Global’s affiliated broker fees, certain mutual funds that generated no-transaction fee (“NTF”) revenue for 1st Global’s affiliated broker and cash sweep products that likewise resulted in 1st Global’s affiliated broker receiving revenue sharing. 1st Global did not provide full and fair disclosure of the conflicts of interest arising from its affiliated broker’s receipt of this compensation. 1st Global also violated its duty to seek best execution by causing certain advisory clients to invest in certain mutual fund share classes when share classes of the same funds that presented a more favorable value for these clients under the particular circumstances in place at the time of the transactions were available to the clients In addition, 1st Global failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder in connection with its mutual fund share class selection practices. 1st Global agreed to pay a civil penalty of $16,873,153. https://www.sec.gov/litigation/admin/2021/ia-5932.pdf
8. On December 20, 2021, the SEC instituted administrative proceedings against David Hansen. Hansen caused Yellowstone Partners to overbill investment advisory clients as part of a fraudulent scheme to inflate his and his co-defendants’ income. Hansen failed to maintain current investment advisory agreements for each client and to keep such records easily accessible for a period of five years, as required by firm procedures. The matter is being litigated. https://www.sec.gov/litigation/admin/2021/ia-5931.pdf
9. On December 20, 2021, the SEC instituted administrative proceedings against Global Infrastructure Management, LLC for failing to properly offset management fees to private equity funds it managed, false and misleading statements to investors and potential investors in those funds concerning management fee offsets, and failure to adequately implement policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder. Global’s failure to fully apply required management fee offsets, and dissemination of inconsistent offering and governing documents was caused by deficiencies in its compliance program. Global Infrastructure Management agreed to pay a civil money penalty of $4,500,000. https://www.sec.gov/litigation/admin/2021/ia-5930.pdf
10. On December 16, 2021, the SEC instituted administrative proceedings against J.P. Morgan Securities LLC. The proceedings arise out of the widespread and longstanding failure of JPMorgan employees throughout the firm, including those at senior levels, to adhere to certain of these essential requirements. These employees communicated both internally and externally via personal text messages, WhatsApp messages, and emails on their personal devices. The federal securities laws impose recordkeeping requirements on broker-dealers to ensure that they responsibly discharge their crucial role in our markets. JPMorgan shall pay a civil money penalty in the amount of $125,000,000. https://www.sec.gov/news/press-release/2021-262 and https://www.sec.gov/litigation/admin/2021/34-93807.pdf
11. On December 16, 2021, the SEC instituted administrative proceedings against John Paulsen. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund (the “Fund”). Navnoor Kang was the Fund’s Director of Fixed Income, with investment responsibility for approximately $50 billion of the Fund’s assets. Kang used his position at the Fund to solicit and receive improper entertainment from Paulsen and Deborah Kelley. Kang directed millions of dollars in state business to the broker-dealer, generating sizable commissions. Paulsen and Kelley planned a ski trip for the purpose of entertaining Kang and his girlfriend. Kang told Paulsen and Kelley that the Fund had very strict rules that prohibited him from accepting anything from Paulsen. Paulsen and Kelley spent thousands of dollars entertaining Kang and his girlfriend. Paulsen and Kelley then sought reimbursement of those expenses from the broker-dealer, and submitted false expense reports which concealed the fact they had entertained Kang on the trip. When the broker-dealer discovered inconsistencies in the expense reports and began an internal investigation, Paulsen and Kelley conspired to lie, and did lie, to the broker-dealer’s internal investigators. Palsen was ordered to pay a civil penalty of $100,00. https://www.sec.gov/litigation/admin/2021/34-93805.pdf
12. On December 15, 2021, the SEC instituted administrative proceedings against Wedbush Securities Inc. Wedbush engaged in unregistered offers and sales of large blocks of low-priced securities by an offshore customer. It is unlawful for any person, directly or indirectly, to offer or sell securities by any means or instruments of transportation or communication in interstate commerce unless a registration statement has been filed with the Commission. No registration statement was in effect as to Wedbush’s offers and sales of the securities at issue, and no exemption from registration was applicable to them. Wedbush was not aware of facts indicating that its offshore customer was engaging in an unlawful distribution of securities. Wedbush failed to conduct a reasonable inquiry. Wedbush agreed to pay disgorgement of $173,508.40, prejudgment interest of $34,332.16, and a civil penalty of $1,000,000. https://www.sec.gov/litigation/admin/2021/33-11015.pdf
13. On December 14, 2021, the SEC instituted administrative proceedings against James Siniscalchi. Siniscalchi pled guilty to one count of conspiracy to commit securities fraud and wire fraud. Siniscalchi was sentenced to three years of probation, including one year of home confinement, and was ordered to make restitution in the amount of $1,909,146.00 and to pay forfeiture in the amount of $2,082,425.00 and a fine in the amount of $10,000. https://www.sec.gov/litigation/admin/2021/ia-5924.pdf
14. On December 14, 2021, the SEC instituted administrative proceedings against David Michael. Michael solicited numerous investors to purchase securities in connection with two unregistered securities offerings in exchange for transaction-based compensation that was paid to Michael and to entites controlled by Michael. During the time Michael was inducing or attempting to induce the purchase of these securities, Michael was not registered with the Commission as a broker or dealer nor while he was associated with an entity registered with the Commission as a broker or dealer. The court will determine remedies at a later date. https://www.sec.gov/litigation/admin/2021/34-93781.pdf
15. On December 10, 2021, the SEC instituted administrative proceedings against Newman Ladd Capital Advisors, LLC (“NLCA”). NLCA’s failed to file with the Commission and to deliver to retail investor clients its Form CRS. NLCA was required to file its initial Form CRS with the Commission as Part 3 of its Form ADV and to begin delivering its Form CRS to prospective and new retail investor clients. The firm failed to file and deliver Form CRS by the deadline, not becoming compliant. NLCA will pay a civil money penalty in the amount of $25,000 to the SEC. https://www.sec.gov/litigation/admin/2021/ia-5920.pdf
16. On December 10, 2021, the SEC instituted administrative proceedings against Rita Mansour. Mansour sold securities in connection with private securities offerings conducted by two pooled investment vehicles that Mansour’s employer advised (the “PIVs”). Those PIVs offered and sold securities to raise bridge funding for the construction of a resort in Montenegro. Investor monies raised through these offerings were to be used to purchase debt in a Montenegrin entity that was to construct the resort. Mansour’s employer offered and sold more than $14 million in securities issued by the PIVs to investors located in the United States, including both its brokerage customers and its advisory clients. Mansour and Mansour’s employer became aware of allegations that their point-person at the Montenegrin entity had misappropriated $488,331 of investor funds by misusing a debit card belonging to that entity to pay for certain personal expenses. Mansour conceded that he was not entitled to certain of the funds alleged to have been misappropriated. The individual agreed to repay approximately $335,000 that he had allocated to personal expenses. The matter is being litigated. https://www.sec.gov/litigation/admin/2021/33-11012.pdf
17. On December 7, 2021, the SEC instituted administrative proceedings against Charles Lloyd and Lloyd Marketing, LLC. Lloyd worked as a sale agent and his marketing entity received transaction-based compensation in the form of commissions for soliciting investors. Lloyd was barred. https://www.sec.gov/litigation/admin/2021/34-93725.pdf
18. On December 2, 2021, the SEC instituted an administrative against HCR Wealth Advisors. The SEC found that the HCR failed to supervise Jeremy Drake, formerly an investment adviser representative of HCR, and failed to implement reasonable compliance-related policies and procedures in response to red flags about Drake’s handling of client accounts. The order found that Drake defrauded two HCR clients out of approximately $1.2 million in management fees. During the same period, Drake misappropriated a total of over $200,000. HCR paid a penalty of $220,000. https://www.sec.gov/litigation/admin/2021/34-93706.pdf
19. On December 2, 2021, the SEC instituted administrative proceedings against Phillip Conley. Conley induced investors to purchase securities by making materially false and misleading statements and omissions concerning the legitimacy of the investments and the use of investor proceeds. Conley failed to invest those proceeds as promised and instead comingled investor funds in bank accounts that he controlled. Conley used most of the funds for his personal benefit, and the remainder to make payments to earlier investors in the nature of a Ponzi scheme. Conly was barred. https://www.sec.gov/litigation/admin/2021/34-93712.pdf
20. On December 2, 2021, the SEC instituted administrative proceedings against Guillaume Boccara for using his access to the Family Fund’s brokerage account to orchestrate hundreds of trades between his own brokerage account and the Family Fund’s brokerage account at prices that were favorable to himself and unfavorable to the Family Fund. Boccara obtained ill-gotten gains of over $500,000. Boccara was barred. https://www.sec.gov/litigation/admin/2021/ia-5918.pdf