June 5, 2018
SEC Orders Cease-and-Desist to Registered Investment Adviser for Multiple Violations of the Advisers Act
On June 4th, 2018, the Securities and Exchange Commission (SEC) released its
order instituting administrative and cease-and-desist proceedings against a registered investment adviser (“Respondent”) found to be in multiple violations of the Advisers Act.
Beginning in December 2014, the SEC Office of Compliance Inspections and Examinations (OCIE) conducted an examination of the Respondent. During the examination, the OCIE found the Respondent to be in an undisclosed agreement with two affiliated outside asset managers (“Third-Party Advisers”). The arrangement called for the Third-Party Advisers to make payments to the Respondent based on the total number of client assets placed or maintained in funds being advised by the Third-Party. From July 2012 through September 2014, the Respondent received approximately $648,00 in fees.
In addition, the Respondent failed to implement a set of policies and procedures designed to detect and prevent conflicts of interest and failed to maintain accurate books and records to reflect the receipt of fees from the Third-Party Advisers.
Going forward, the Respondent is ordered to cease-and-desist from committing any further, or future, violations of the Advisers Act. The Respondent will also be censured and pay a civil money penalty of $500,000 to the SEC to be transferred to the general fund of the United States Treasury.
WHAT DOES THIS MEAN FOR ME?
The OCIE continues to focus on the disclosure and calculation of fees, expenses, and other charges as an examination priority. If you have any questions about this case and how it might relate to you or your firm, please reach out to Fairview directly.