1. On September 29, 2023, The SEC instituted administrative proceedings against Maxim Group, LLC, a registered broker-dealer. Maxim engaged in facilitating high volume sales of low-priced OTC stock and did not reasonably design or adequately implement its anti-money laundering (“AML”) policies and procedures (“AML Policies”) to reasonably address the risks associated with this business. Maxim failed to identify numerous red flags, and failed to sufficiently investigate certain conduct as required by its AML Policies. Due to the deficiencies in Maxim’s design and implementation of its AML Policies and its failure to identify and sufficiently investigate red flags, Maxim failed to file SARs for numerous transactions that it should have had reason to suspect involved possible fraudulent activity or had no business or apparent lawful purpose. In instances where Maxim personnel identified red flags concerning U.S. low-priced securities trading activity during the relevant period, Maxim failed to file a SAR on suspicious activity report. Maxim also violated Regulation SHO by receiving from certain broker-dealers “not held” long sale orders to sell low-priced microcap securities, which Maxim would execute in a series of principal short sales throughout the day. Maxim did not, however, “locate” shares prior to effecting its short sales as required. Maxim was ordered to pay a civil money penalty in the amount of $800,000. https://www.sec.gov/files/litigation/admin/2023/34-98605.pdf
2. On September 28, 2023, The SEC instituted administrative proceedings against Woodbury Financial Services, Inc., a dually registered investment adviser and broker-dealer. Woodbury used a form agreement to govern certain aspects of the relationship among Woodbury, its clients, and a particular clearing agent Woodbury used. Each of these agreements included a margin account agreement that contained language required by the clearing agent that permitted the clearing agent to accept, without inquiry or investigation, any instructions given by Woodbury concerning these clients’ accounts. Because of Woodbury having this authority with respect to the client funds and securities in the affected accounts, Woodbury had custody of these assets. Accordingly, because Woodbury failed to obtain verification by actual examination of the client funds and securities in the affected accounts by an independent public accountant, Woodbury violated the custody rule. Woodbury was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6444.pdf
3. On September 28, 2023, The SEC instituted administrative proceedings against SagePoint Financial, Inc., a dually registered investment adviser and broker-dealer. SagePoint used a form agreement to govern certain aspects of the relationship among Woodbury, its clients, and a particular clearing agent SagePoint used. Each of these agreements included a margin account agreement that contained language required by the clearing agent that permitted the clearing agent to accept, without inquiry or investigation, any instructions given by Woodbury concerning these clients’ accounts. Because of SagePoint having this authority with respect to the client funds and securities in the affected accounts, SagePoint had custody of these assets. Accordingly, because SagePoint failed to obtain verification by actual examination of the client funds and securities in the affected accounts by an independent public accountant, SagePoint violated the custody rule. SagePoint was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6443.pdf
4. On September 28, 2023, The SEC instituted administrative proceedings against Osaic Wealth, Inc., a dually registered investment adviser and broker-dealer. Osaic used a form agreement to govern certain aspects of the relationship among Osaic, its clients, and a particular clearing agent Osaic used. Each of these agreements included a margin account agreement that contained language required by the clearing agent that permitted the clearing agent to accept, without inquiry or investigation, any instructions given by Osaic concerning these clients’ accounts. Because of Osaic having this authority with respect to the client funds and securities in the affected accounts, Osaic had custody of these assets. Accordingly, because Osaic failed to obtain verification by actual examination of the client funds and securities in the affected accounts by an independent public accountant, Osaic violated the custody rule. Osaic was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6442.pdf
5. On September 28, 2023, The SEC instituted administrative proceedings against FSC Securities Corporation a dually registered investment adviser and broker-dealer. FSC used a form agreement to govern certain aspects of the relationship among FSC, its clients, and a particular clearing agent FSC used. Each of these agreements included a margin account agreement that contained language required by the clearing agent that permitted the clearing agent to accept, without inquiry or investigation, any instructions given by FSC concerning these clients’ accounts. Because of FSC having this authority with respect to the client funds and securities in the affected accounts, FSC had custody of these assets. Accordingly, because FSC failed to obtain verification by actual examination of the client funds and securities in the affected accounts by an independent public accountant, FSC violated the custody rule. FSC was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6441.pdf
6. On September 28, 2023, The SEC instituted administrative proceedings against Forepont Capital LLC. Forepont is a Delaware limited liability company with its principal office and place of business in New York. Forepont has approximately $82 million in regulatory assets under management in two pooled investment vehicles. Forepont is a registered investment adviser and committed multiple violations of the Advisers Act with respect to the two private funds that it advised. Forepont failed to timely distribute annual audited financial statements prepared in accordance with generally accepted accounting principles to the investors in the two private funds. Forepont engaged in principal transactions with one of the two private funds without disclosing to its client, the fund, in writing prior to completion of the transactions that Forepont was acting as principal and without obtaining the client’s consent to the transactions. Forepont was ordered to pay a civil monetary penalty in the amount of $150,000. https://www.sec.gov/files/litigation/admin/2023/ia-6438.pdf
7. On September 28, 2023, The SEC instituted administrative proceedings against Apexium Financial LP., a registered investment adviser. Apexium failed to manage a conflict of interest in a manner consistent with its representations in its firm brochures. Apexium disclosed that it had a financial conflict of interest when selecting an affiliated firm to manage certain clients’ assets and stated that Apexium would manage this conflict by documenting why it was in the client’s best interest to use the affiliated firm. However, Apexium did not document in its firm brochures best interest determinations concerning the use of the affiliated firm. Apexium was ordered to pay a civil money penalty in the amount of $150,000. https://www.sec.gov/files/litigation/admin/2023/ia-6437.pdf
8. On September 28, 2023, The SEC instituted administrative proceedings against Citigroup Global Markets, Inc. (“CGMI”), a registered investment adviser, and Citi International Financial Services, LLC (aka Insigneo. “CIFS”), a registered investment adviser and broker-dealer. CGMI and CIFS made securities recommendations to retail customers without complying with the disclosure requirements under Regulation Best Interest (Reg. BI) or the requirement to deliver the Form Client Relationship Summary (Form CRS). CGMI and CIFS was ordered to pay, jointly and severally, a civil money penalty in the amount of $1,975,000. https://www.sec.gov/files/litigation/admin/2023/34-98609.pdf
9. On September 28, 2023, The SEC instituted administrative proceedings against Kathryn Jane Meredith, d/b/a KM Advisory Services and John Paul Harnish, d/b/a KM Advisory Services. The SEC issued two separate but related orders instituting and simultaneously settling administrative and cease-and-desist proceedings against a former registered investment adviser, KM Advisory Services (“KMA”), an unincorporated sole proprietorship owned by Kathryn Jane Meredith (“Meredith”). KMA breached its fiduciary duties in connection with the receipt of mutual fund fees and commissions in the form of sales “loads” from advisory client investments without fully and fairly disclosing the related conflicts of interest. KMA failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations and the rules thereunder in connection with its mutual fund share class and broker-dealer selection practices. Meredith was ordered to pay $574,743 in disgorgement, $77,252 in prejudgment interest, and a $100,000 civil money penalty while Harnish was ordered to pay $220,097 in disgorgement, $5,549 in prejudgment interest, and a $75,000 civil money penalty. https://www.sec.gov/files/litigation/admin/2023/34-98594.pdf
10. On September. 26, 2023, the SEC instituted pursuant against Steven Fernandez and Monica O’Mealia. Fernandez and O’Mealia acted as a broker, but was not registered with the SEC t or associated with a registered broker-dealer. Fernandez and O’Mealia personally, and through their team of about 35 sales agents, solicited and raised approximately $19.4 million from over 800 investors through sales of securities in unregistered transactions issued by MJ Capital. The securities sold to investors were in the form of “Merchant Cash Advance Agreements.” Fernandez and O’Mealia solicited prospective investors through postings on his Instagram page, which he used to pique investors’ interest in the investment opportunity. They also directed prospective investors to MJ Capital’s website. Fernandez and O’Mealia received transaction-based compensation in the form of commissions from MJ Capital based on the sales of its securities. Fernandez and O’Mealia were barred. https://www.sec.gov/files/litigation/admin/2023/34-98525.pdf
11. On September. 26, 2023, the SEC instituted pursuant against AssetMark, Inc. a registered investment adviser. AssetMark breached its fiduciary duty to advisory clients through its failure to adequately disclose its conflicts of interest involving a cash sweep program operated by an affiliated custodian and its receipt of payments from certain other custodians. AssetMark failed to implement written policies and procedures reasonably designed to prevent violations of the Advisers Act related to its disclosure of conflicts arising and AssetMark’s receipt of custodial support payments. AssetMark agreed to a civil penalty totaling $18,326,709. https://www.sec.gov/files/litigation/admin/2023/ia-6434.pdf
12. On September. 26, 2023, the SEC instituted pursuant against Bruderman Asset Management, LLC, now known as Gary Goldberg Planning Services, LLC, and Matthew Bruderman. These proceedings concern the misuse of proceeds raised by BAM from investment advisory clients. BAM at Bruderman’s direction, raised at least $6.1 million for debt and equity in three private entities in which Bruderman had significant ownership interests and decision-making authority from at least thirteen investment advisory clients. BAM and Bruderman failed to disclose to their investment advisory clients that the money they invested would be temporarily used for the operating expenses of entities other than those in which they intended to invest or to repay outstanding loans Bruderman made to the entities or to repay intercompany loans. BAM, by and through Bruderman, failed to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest. The SEC considered remedial acts promptly undertaken by BAM and Bruderman, including voluntarily repaying certain debts to investment advisory clients in connection with the Bruderman affiliated companies BAM and Bruderman was ordered to pay, jointly and severally a civil money penalty in the amount of $250,000. https://www.sec.gov/files/litigation/admin/2023/ia-6435.pdf
13. On September. 25, 2023, the SEC instituted administrative proceedings against DWS Investment Management Americas, Inc. (DIMA), a registered investment adviser. This matter arises from DIMA’s material misstatements and its failure to adopt and implement policies and procedures reasonably designed to prevent the resulting violations of the Advisers Act concerning DIMA’s integration of Environmental, Social, and Governance (“ESG”) factors in research and investment recommendations for certain actively managed ESG integrated mutual funds and separately managed account strategies advised by DIMA. DIMA agreed to pay a civil money penalty in the amount of $19,000,000. https://www.sec.gov/files/litigation/admin/2023/ia-6432.pdf
14. On September. 25, 2023, the SEC instituted administrative proceedings against Wellesley Asset Management, Inc., a registered investment adviser. This matter arises from material misstatements and omissions in marketing materials by WAM, directly and indirectly, to certain of its advisory clients and prospective clients concerning an index (the “WAM Index”) that WAM created in January 2013 to depict the performance of its convertible bond investment strategy from January 2000 forward. WAM used WAM Index performance graphs in advertisements from February 2015 to March 2022, a period when WAM’s investment strategy focused exclusively on convertible bonds. WAM’s written advertisements, however, failed to fully and fairly disclose the methodologies it used to construct the index. Among other things, WAM at times failed to adequately disclose that the WAM Index included hypothetical performance. WAM also presented the WAM Index’s performance during at least three client webinars and misstated that the WAM Index represented composite returns from its convertible bond strategy. WAM agreed to pay a civil money penalty in the amount of $1,000,000. https://www.sec.gov/files/litigation/admin/2023/ia-6433.pdf
15. On September. 25, 2023, the SEC charged Vista Financial Advisors LLC and Ruben Williams for making material misrepresentations in Vista’s SEC Form ADV filings regarding Vista’s regulatory assets under management and owners. Vista and Williams falsely claimed in Vista’s Form ADV filing that Vista had $10 billion in RAUM. Vista and Williams ignored repeated requests from SEC staff to substantiate, correct and/or withdraw the claims regarding Vista’s RAUM. Rather than undertaking any corrective measures in response to the SEC’s inquiries, Vista compounded the misrepresentation by filing an updated Form ADV that stated its RAUM had grown to nearly $11.5 trillion. The Form ADV failed to disclose the identity of one of Vista’s owners, and misstated how Vista’s ownership interest was divided up among its remaining owners. This matter is being litigated. https://www.sec.gov/litigation/litreleases/lr-25848
16. On September. 25, 2023, the SEC filed settled fraud charged against Douglas MacWright and Highlander Capital Management, LLC (“HCM”), a registered investment adviser, for perpetrating a long-running cherry-picking scheme that reaped more than one million dollars of illicit gains. MacWright, through HCM, used an omnibus or average price account to disproportionately allocate trades that had increased in value during the day they were executed to a preferred account. MacWright disproportionately allocated trades that had decreased in value during the day they were executed to accounts held by other persons and entities, including accounts owned by MacWright, MacWright’s family members, or entities he partially owned. MacWright agreed to pay $1,118,718 in disgorgement, $253,903 in prejudgment interest, and a civil penalty of $400,000; and order HCM to pay a civil penalty of $150,000. https://www.sec.gov/litigation/litreleases/lr-25849
17. On September. 25, 2023, the SEC announced settled charges against two Utah fund managers, Phoenix Outsourced Development and Edger Solutions Management, and their principals, including a securities law recidivist, for orchestrating a fraudulent high-yield Forex trading program through two investment funds resulting in approximately $2.1 million in investor losses. Michael McLaughlin, a securities law recidivist, and Derek McLaughlin, created an investment fund called POD Solutions, LLC, managed by their entity, Phoenix Outsourced Development. Louis Goff, Brian Hubbard, Eric Fairbourn, and Nicholas Deluca created a separate, but similar investment fund, Edger Solutions, LLC, managed by their entity, The two fund managers and their principals failed to disclose to investors that their investments would be combined into a Forex trading account that was operated by a convicted felon and a securities fraud recidivist. The defendants made numerous material misrepresentations to investors concerning fees, profit and loss calculations, and the historical performance of the funds. The defendants fabricated monthly account statements and that Michael and Derek McLaughlin misappropriated investor funds. Michael Mclaughlin was ordered to pay a disgorgement of $116,940 plus prejudgment interest of $11,503, and a civil penalty of $207,182. Derek McLaughlin was ordered to pay a disgorgement of $108,433 plus prejudgment interest of $10,667, and a civil penalty of $75,000. Brian Hubbard, Eric Fairbourn, and Nicholas Deluca was ordered to pay civil penalties of $50,000 each. https://www.sec.gov/litigation/litreleases/lr-25850
18. On September 21,2023, the SEC instituted administrative proceeding against William Ichioka, a resident of New York and the CEO and founder of Ichioka Ventures, LLC (“Ichioka Ventures”). Ichioka acted as an investment adviser to Ichioka Ventures because he was engaged in the business of providing advice to the fund regarding investing in, purchasing, or selling securities for compensation. Ichioka has never been registered as an investment adviser with the Commission. Ichioka fraudulently raised over $25 million by selling promissory notes issued by Ichioka Ventures to over 75 investors located primarily in the United States. Ichioka was barred. https://www.sec.gov/files/litigation/admin/2023/ia-6426.pdf
19. On September 20, 2023, the SEC filed charges against Lufkin Advisors, LLC, an investment adviser registered with the SEC, and Chauncey Lufkin, its principal, with engaging in an ongoing fraud on the private funds they manage and the investors in those funds, as well as multiple other violations, including failing to produce books and records to the SEC’s Division of Examinations when requested. This fraud includes failing to disclose a loss of control of crypto assets entrusted to adviser, multiple investments with Mr. Lufkin’s spouse’s company without proper disclosure to private- fund investors, failure to properly account for withdrawals from these funds, failure to monitor the value of the investment made by the funds, and breach of their duty to manage the assets entrusted to them. This matter is being litigated. https://www.sec.gov/litigation/litreleases/lr-25839
20. On September 19, 2023, the SEC instituted administrative proceedings against Clark Reiner. This proceeding concerns material misrepresentations made by Reiner to investors in Woodstock Capital Partners, LP, a hedge fund that he managed through its general partner, Woodstock Capital, LLC. Woodstock Partners was a feeder fund which invested its assets into a master fund, Woodstock Master Capital, Ltd. Woodstock Capital raised approximately $10 million from two investors in the now defunct Woodstock Fund. Reiner, who was Woodstock Capital’s principal and manager, materially misrepresented Woodstock Fund’s investment strategy to these two investors. After telling investors that their funds would be invested in, for example, government bonds and other debt securities, the Woodstock Fund actually traded derivatives. Reiner was barred and was ordered to pay disgorgement of $24,995, prejudgment interest of $2,610, and a civil monetary penalty in the amount of $200,000. https://www.sec.gov/files/litigation/admin/2023/33-11237.pdf
21. On September 19, 2023, the SEC charged against William Miller. Miller made material misstatements to the investors in Woodstock Capital Partners, a limited partnership “feeder fund” that was managed by an unregistered investment adviser, Woodstock Capital, LLC, and that invested all of its assets into a “master fund,” Woodstock Master Capital. Miller had a revenue-sharing agreement with Woodstock Capital through a limited liability company that he controlled, collected management fees from Woodstock Capital, and communicated with investors on behalf of Woodstock Capital. Miller made material misstatements to two entities that would each invest $5 million in Woodstock Partners, a charter school in Minnesota and a real estate fund in Michigan. Miller made misstatements about the Woodstock Fund’s investment strategy and performance, and Woodstock Capital’s status as a registered investment adviser. Miller told investors that the Woodstock Fund would invest in government bonds and short-term interest rate debt securities. It did not. The Woodstock Fund executed a strategy far different from what Miller described to the investors, and each of the two investors ultimately lost more than $4 million—or 80%—of their respective initial capital contributions. Reiner made material misrepresentations to the Charter School and Real Estate Fund. Reiner was ordered to pay disgorgement of $24,995 and a civil penalty of $200,000. https://www.sec.gov/files/litigation/complaints/2023/comp25834.pdf
22. On September 19, 2023, the SEC charged against Concord Management LLC, and its owner and principal, Michael Matlin, for operating as unregistered investment advisers to their only client – a wealthy former Russian official widely regarded as having political connections to the Russian Federation. Both Concord and Matlin were required to register as investment advisers with the Commission based on their activities, but neither did. Matlin and Concord avoided certain legal obligations for investment advisers that protect the investing public, such as various reporting requirements and examination by the SEC. Concord and Matlin managed investments for their sole client with an estimated total value of $7.2 billion in 112 different private funds. This matter is being litigated. https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-186.pdf
23. On September 18, 2023, the SEC charged Pierre Economacos, a registered representative at a registered broker-dealer, for failing to report to the Firm’s anti-money laundering group suspicious and unusual transactions in a brokerage account of his long-time customer that surrounded the announcement of the acquisition of the company where the customer’s close family member was an executive. Economacos was ordered to pay a civil money penalty in the amount of $20,000. https://www.sec.gov/files/litigation/admin/2023/34-98418.pdf
24. On September 18, 2023, the SEC instituted administrative proceedings against Summit Planning Group, Inc., a registered investment adviser, and Richard Urciuoli. These proceedings arise out of breaches of the fiduciary duty of care and compliance failures by Summit and Urciuoli, Summit’s sole owner and investment professional, invested advisory client assets in a volatility linked exchange traded product—the iPath Series B S&P 500 VIX Short-Term Futures ETN (“VXX”)—for extended periods of time without having a reasonable basis to do so. This conduct was inconsistent with VXX’s prospectus and pricing supplement, which stated that the product carried unique risks, was designed to be held for very short time periods, likely would incur costs if held for more than one trading session, and required frequent monitoring. The client accounts holding VXX collectively lost over $443,809 from those investments. Summit also failed to adopt and implement policies and procedures reasonably designed to prevent violations of the Advisers Act. Summit and Urciuoli were ordered to pay, jointly and severally, disgorgement of $8,476, prejudgment interest of $925, and civil penalties of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6423.pdf
25. On September 18, 2023, the SEC instituted administrative proceedings against Exchange Traded Managers Group LLC and Samuel Masucci. Masucci entered into a prohibited joint transaction to the detriment of Adviser’s client ETFMG Alternative Harvest ETF. Masucci and Adviser violated their duty of loyalty to MJ by misleading MJ’s Independent Trustees about the Masucci and Adviser financial conflicts of interest. Masucci and Advisor also breached their duty of care by knowingly providing advice that favored their own interests over the best interest of their client MJ. The SEC ordered Masucci was ordered to pay a $400,000 civil money penalty while the ETMG and ETF Managers was ordered to pay a $4,000,000 civil money penalty. https://www.sec.gov/files/litigation/admin/2023/34-98426.pdf
26. On September 15, 2023, the SEC instituted administrative proceedings against HCR Wealth Advisors (“HCR”) a registered investment adviser. HCR failed to reasonably 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. Drake defrauded two HCR clients, a married couple, out of approximately $1.2 million in management fees, approximately $900,000 of which Drake received as incentive-based compensation from HCR. Drake misappropriated approximately $215,000 from the accounts of four HCR clients, including the married couple and two other individuals, to support a struggling restaurant that was majority owned by the married couple and in which Drake held a minority ownership interest. HCR was ordered to pay a civil money penalty in the amount of $220,000. https://www.sec.gov/files/litigation/admin/2023/34-98408.pdf
27. On September 15, 2023, the SEC announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 29 soliciting entities, three impersonators of genuine firms, and one bogus regulator. The SEC’s list of soliciting entities that have been the subject of investor complaints, known as the Public Alert: Unregistered Soliciting Entities (PAUSE) list, enables investors to better inform themselves and avoid being victims of fraud. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and recordkeeping requirements. https://www.sec.gov/news/press-release/2023-181
28. On September 14, 2023, the SEC charged GlennCap LLC and Jonathan Glenn. GlennCap is a Connecticut limited liability company and Glenn has been the sole owner, principal, employee, and investment adviser representative. GlennCap, acting through Glenn, its sole owner and principal, engaged in undisclosed “cherry-picking,” a practice of fraudulently allocating profitable trades to favored accounts at the expense of other advisory clients. Glenn allocated a disproportionate number of trades with positive first-day returns to accounts belonging to certain favored clients, GlennCap (which Glenn owns), and another account that Glenn controlled, while allocating a disproportionate number of trades with negative first-day returns to other client accounts. Glenn accomplished this by executing block trades in GlennCap’s omnibus brokerage account and then waiting until later in the day, after he could see whether the positions had increased or decreased in value, to allocate the trades to either favored or disfavored accounts. GlennCap and Glenn also made false and misleading statements concerning their trading practices in GlennCap’s Forms ADV, Part 2A, which were provided to clients and prospective clients. GlennCap and Glenn was ordered to pay jointly and severally, disgorgement of $2,743,616 and prejudgment interest of $251,357. Glenn was ordered to pay a civil money penalty in the amount of $500,000. https://www.sec.gov/files/litigation/admin/2023/33-11234.pdf
29. On September 13, 2023, the SEC instituted administrative proceedings against Artemis Wealth Advisors, LLC, a registered investment adviser, had investment discretion over more than $100 million of reportable securities and was therefore obligated to file quarterly Forms 13F. Artemis failed to file Forms 13F. Artemis was ordered to pay a civil money penalty in the amount of $150,000. https://www.sec.gov/files/litigation/admin/2023/34-98381.pdf
30. On September 13, 2023, the SEC instituted administrative proceedings against Rand Heckler, worked as a registered representative for various broker-dealers. Heckler incorporated Heckler, Inc. and served as its Chief Executive Officer. Heckler claimed to operate a hedge fund through Heckler, Inc. and used bank accounts in the name of Heckler, Inc. to receive, and then misappropriate for his personal use, investor funds. Heckler engaged in a scheme whereby he made material misstatements and omissions while soliciting at least $755,000 in funds from an investor to purchase securities in a sham hedge fund that he purportedly managed. Heckler misappropriated most of these funds for personal expenses. Heckler, in a Ponzi-like fashion, also defrauded another investor by soliciting $100,000 for a “dividend investment” while actually having the funds used to pay the earlier investor in the sham hedge fund for a redemption request. Heckler was barred.
31. On September 12, 2023, the SEC instituted administrative proceedings against Yieldstreet Inc., (“YS Inc.”) and Yieldstreet Management, LLC (“YSM”). YS Inc. is a privately-held corporation that operates the yieldstreet.com website through which it and affiliated entities solicited investors. YSM is a registered investment adviser and provides advisory services to pooled investment vehicles that offer securities to investors through the yieldstreet.com website. One of these pooled investment vehicles (the “Fund”) issued notes for the Vessel Deconstruction VI Offering. YieldStreet failed to disclose critical information to investors in asset-backed securities offering that financed the deconstruction of retired ships. The failure to disclose such material information rendered statements made by YS Inc. and YSM misleading. YieldStreet made six offerings of securities to finance loans to a single foreign borrower (the “Borrower”) to deconstruct ships. YSM and YS Inc. were ordered to pay disgorgement of $888,909, prejudgment interest of $50,311 and civil monetary penalty in the amount of $1,000,000. https://www.sec.gov/files/litigation/admin/2023/33-11230.pdf
32. On September 12, 2023, the SEC instituted administrative proceedings against True Capital Management, LLC, an investment adviser and terminated its registration after selling certain of its assets and assigning its advisory contracts to another investment adviser. True Capital’s
individual clients were primarily high-net-worth individuals. True Capital was also the investment adviser to a number of private funds including funds whose objective was investing in real estate (the “fund clients”). The investors in these fund clients were True Capital’s pre-existing individual clients. True Capital marketed itself to professional athletes, entertainers, and entrepreneurs, provided brokerage services in connection with the sale of equity interests to its advisory clients, including both individuals and funds. True Capital, despite not being registered with the SEC as a broker-dealer, was regularly paid transaction-based compensation by the sellers, and by its fund clients, for acting as a broker in these securities transactions. True Capital was ordered to pay disgorgement of $594,897, prejudgment interest of $76,896 and a civil monetary penalty of $150,000, totaling $821,793. https://www.sec.gov/files/litigation/admin/2023/34-98354.pdf
33. On September 11, 2023, the SEC instituted administrative proceedings against Simplex Trading, LLC, a registered broker-dealer that engages in proprietary options trading. Simplex engaged in opportunistic, proprietary options trading and executed short sales of millions of shares of the underlying stocks to hedge that trading without locating shares of those stocks to borrow in improper reliance upon the bona-fide market making exception to the locate requirement set forth in Rule 203(b)(1) of Regulation SHO. Simplex executed approximately 19,000 short sales without complying with the locate requirement during this period. Simplex was ordered to pay a civil monetary penalty in the amount of $200,000. https://www.sec.gov/files/litigation/admin/2023/34-98346.pdf
34. On September 11, 2023, the SEC instituted administrative proceedings against Mortgage Industry Advisory Corporation (“MIAC”), a registered investment adviser under its prior name Servicing.com. MIAC has approximately $1.195 billion of regulatory assets under management. MIAC’s clients generally consist of regulated depositories, mortgage originators, government entities, federal home loan banks, and real estate investment trusts. MIAC’s investment advisory services consist of providing risk management and hedging advice to mortgage originators and holders. MIAC failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules adopted thereunder, to conduct annual reviews of its compliance program and to establish, maintain, and enforce a written code of ethics. MIAC was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6413.pdf
35. On September 11, 2023, the SEC charged Banorte Asset Management Inc., a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. Banorte advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. Banorte was ordered to pay a civil money penalty in the amount of $50,000. https://www.sec.gov/files/litigation/admin/2023/ia-6404.pdf
36. On September 11, 2023, the SEC charged BTS Asset Management Inc., a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. BTS advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. BTS was ordered to pay a civil money penalty in the amount of $135,000. https://www.sec.gov/files/litigation/admin/2023/ia-6405.pdf
37. On September 11, 2023, the SEC charged Elm Partners Management LLC, a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. Elm Partners advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. ELM Partners was ordered to pay a civil money penalty in the amount of $175,000. https://www.sec.gov/files/litigation/admin/2023/ia-6406.pdf
38. On September 11, 2023, the SEC charged Hansen and Associates Financial Group Inc, a registered investment for failing to comply with amendments to Advisers Act Rule 206(4)-1. Hansen and Associates advertised hypothetical performance on its public website without implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. Hansen and Associates was ordered to pay a civil money penalty in the amount of $50,000. https://www.sec.gov/files/litigation/admin/2023/ia-6407.pdf
39. On September 11, 2023, the SEC charged Linden Thomas Advisory Services LLC, a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. Linden Thomas advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. Linden Thomas was ordered to pay a civil money penalty in the amount of $135,000. https://www.sec.gov/files/litigation/admin/2023/ia-6408.pdf
40. On September 11, 2023, the SEC charged Macroclimate LLC, a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. Macroclimate advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. In addition, Macroclimate failed to maintain copies of each advertisement that it disseminated in contravention of Section 204(a) of the Advisers Act and Rule 204-2(a)(11). Macroclimate was ordered to pay a civil money penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/ia-6409.pdf
41. On September 11, 2023, the SEC charged McElhenny Sheffield Capital Management LLC (“MSCM”), a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. MSCM advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. MSCM was ordered to pay a civil money penalty in the amount of $60,000. https://www.sec.gov/files/litigation/admin/2023/ia-6410.pdf
42. On September 11, 2023, the SEC charged MRA Advisory Group, a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. MRA advertised hypothetical performance on its public website without adopting and implementing policies and
procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. In addition, MRA failed to maintain copies of each advertisement that it disseminated in contravention of Section 204(a) of the Advisers Act and Rule 204-2(a)(11). MRA was ordered to pay a civil money penalty in the amount of $85,000. https://www.sec.gov/files/litigation/admin/2023/ia-6411.pdf
43. On September 11, 2023, the SEC charged Trowbridge Capital Partners LLC, a registered investment adviser for failing to comply with amendments to Advisers Act Rule 206(4)-1. Trowbridge advertised hypothetical performance on its public website without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the intended audience. Trowbridge was ordered to pay a civil money penalty in the amount of $60,000. https://www.sec.gov/files/litigation/admin/2023/ia-6412.pdf
44. On September 8, 2023, the SEC obtained a preliminary injunction against Mina Tadrus and Tadrus Capital LLC related to a Ponzi scheme. Tadrus and Tadrus Capital solicited and sold investments in Tadrus Capital Fund LP, a purported pooled investment vehicle that targeted members of the Egyptian Coptic Christian community. Tadrus and Tadrus Capital raised more than $5 million from at least 31 investors and falsely told them that their funds would be pooled and invested using algorithmic trading that would guarantee a steady monthly return on investment. Tadrus and Tadrus Capital did not actually invest the investors’ funds as promised. Tadrus and Tadrus Capital used at least $1.4 million to make purported ROI payments to other investors in Ponzi fashion and otherwise misappropriated at least $380,000. This matter is being litigated. https://www.sec.gov/litigation/litreleases/lr-25823
45. On September 6, 2023, the SEC published a Risk Alert providing additional information regarding the Division’s risk-based approach for both selecting registered investment advisers to examine and in determining the scope of risk areas to examine. The Risk Alert also includes an attachment with the staff’s typical initial request for documents and information, as well as additional requests for information and documents from the adviser the staff may request as the examination progresses. https://www.sec.gov/exams/announcement/risk-alert-ia-risk-and-requesting-documents-090623
46. On September 5, 2023, the SEC instituted administrative proceedings against Jason Nordlund. Nordlund is the CEO and principal of Norstar Capital Management LLC, an investment adviser based in Minnesota. Norstar Capital Management is the investment adviser for Norstar F&F Capital, LLC (the “Fund”), a private fund with approximately 45 investors. Nordlund was also a member of the board of directors of Affinity Gold Corporation, a Nevada corporation headquartered in Minnesota. Nordlund orchestrated a fraudulent scheme to inflate the value of the Fund by manipulating the price of Affinity Gold stock, which was one of the Fund’s largest holdings. Nordlund reported inflated net asset values of the Fund to investors and omitted to disclose that the value of the Fund’s holdings of Affinity Gold stock were inflated or Nordlund’s role in manipulating the price of the stock. Nordlund was barred. https://www.sec.gov/files/litigation/admin/2023/ia-6394.pdf
47. On September 5, 2023, the SEC charged Apex Financial Advisors Inc., a registered investment adviser to private funds, for failing to timely distribute annual audited financial statements prepared in accordance with Generally Accepted Accounting Principles to investors in certain private funds that it advised. Apex Financial did not promptly update its Forms ADV as new events regarding those audits occurred. Apex Financial was ordered to pay a civil money penalty in the amount of $130,000. https://www.sec.gov/files/litigation/admin/2023/ia-6396_0.pdf
48. On September 5, 2023, the SEC charged Lloyd George Management Limited (“LGM”), a registered investment adviser to private funds. LGM failed to timely distribute annual audited financial statements to investors in a private fund that it advised; the audits were completed pursuant to the International Standards on Auditing, not U.S. GAAS requirements; and the auditor that performed the fiscal year end audit was not registered with the PCAOB. LGM was ordered to pay a civil money penalty in the amount of $50,000. https://www.sec.gov/files/litigation/admin/2023/ia-6395.pdf
49. On September 5, 2023, the SEC charged Eideard Group, LLC, a registered investment adviser to private funds. Eideard failed to maintain securities of certain private funds that it advised with a qualified custodian. Eideard failed to conduct and timely distribute annual audited financial statements prepared in accordance with Generally Accepted Accounting Principles to investors in certain private funds that it advised. Eideard was ordered to pay a civil penalty in the amount of $80,000. https://www.sec.gov/files/litigation/admin/2023/ia-6399.pdf
50. On September 5, 2023, the SEC charged Bluestone Capital Management LLC, a registered investment to private funds. Bluestone failed to have the required audits performed and timely distribute annual audited financial statements prepared in accordance with Generally Accepted Accounting Principles to investors in a private fund that it advised. Bluestone did not properly describe the status of its fund’s financial statement audits when filing its Forms ADV and did not update certain responses in its Form ADV annual updating amendments for multiple years as required by the Form ADV instructions. Bluestone was ordered to pay a civil money penalty in the amount of $75,000. https://www.sec.gov/files/litigation/admin/2023/ia-6398.pdf
51. On September 5, 2023, the SEC charged Disruptive Technology Advisers LLC, a registered investment adviser to private funds. Disruptive failed to maintain securities of certain private equity funds that it advised with a qualified custodian. Disruptive failed to conduct or timely distribute annual audited financial statements prepared in accordance with Generally Accepted Accounting Principles to investors in certain private funds that it advised. Disruptive did not update certain responses in its Form ADV as required by the Form ADV instructions. Disruptive was ordered to pay a civil money penalty in the amount of $225,000. https://www.sec.gov/files/litigation/admin/2023/ia-6400.pdf
52. On September 1, 2023, the SEC instituted administrative proceedings against SQN Capital Management, LLC, and Jeremiah Silkowski. SQN Capital is a registered investment adviser, and Silkowski is its President, Chief Executive Officer and Chief Compliance Officer. SQN Capital failed to timely distribute annual audited financial statements prepared in accordance with Generally Accepted Accounting Principles to the investors in two private and two public funds that it advised. SQN Capital also failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder, a violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, commonly referred to as the “compliance rule.” Silkowski willfully aided and abetted and caused SQN Capital’s custody rule and compliance rule violations. SQN Capital and Silkowski willfully aided and abetted and caused the public funds’ violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. SQN was ordered to pay a civil monetary penalty in the amount of $200,000 while Silkowski was ordered to pay a civil monetary penalty in the amount of $100,000. https://www.sec.gov/files/litigation/admin/2023/34-98272.pdf