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This Week In Securities Litigation (Week ending Feb. 10, 2017)

Three of the six actions filed this week by the Commission were against registered investment advisers. One involved the misappropriation of funds, another centered on the failure to disclose a related party transaction and a third was based on the

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SEC Charges Adviser With Concealing True Value of Accounts

When investment advisers and brokers misrepresent the value of the account to a client it is frequently because something untoward has occurred – huge trading losses, misappropriation or other malfeasance. The Commission’s most recent case in this area however has

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SEC Charges Adviser With Misappropriation

It is axiomatic that investment advisers have a fiduciary duty to use investor funds entrusted to them for the benefit of the investors. The duty applies to registered and unregistered investment advisers. The Commission’s latest action involving an unregistered investment

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SEC Charges Adviser With Improper Valuation

Sometimes it can be difficult to do the right thing. For example, in the SEC’s latest case involving an investment adviser, a valuation error was discovered. A correction was made. The investors were compensated. The adviser, however, failed to follow

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SEC Charges Adviser With Fraud Tied to “Death Puts”

The Commission’s enforcement division and inspectors at OCIE continue to work closely and have developed a series of cases in recent months. One of the more unusual proceeding spawned through this relationship is the action involving a hedge fund, its

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SEC Charges Provider of “Premier” Advisory Services with Fraud

Professional athletes and high net worth individuals who seek concierge type advisory services can become the victims of the advisers they trust to manage their affairs. One such case was SFX Financial Advisory Management Enterprises, Inc., Adm. Proc. File No.

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IA Settles With SEC, USAO After Letter to Investors Admitting Losses

The SEC and the Manhattan U.S. Attorney’s Office brought actions against a hedge fund adviser who lost most of the money raised from investors through risky trading while trying to conceal that fact from them, the brokers and others –

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IA Admits Theft to Settle SEC Fraud Charges

The Commission filed another action in which admissions were required as part of the settlement. The action centeres on an investment adviser who misappropriated just under $2 million from his clients. As part of the settlement he admitted the theft.

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BlackRock, CCO Settle SEC Conflict Charges

Conflicts of interest involving market professionals continue to be a focus of SEC enforcement. In many cases the conflict is uncovered by the inspection staff, OCIE. This time, however, the information came from an article published by the Wall Street

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SEC Inspection Staff Uncovers A Possible Fraud

The SEC claims that an individual that controlled several entities including an investment fund created phony consumer loans to funnel investor cash to his faltering financial operations rather than investing the money in actual loans in accord with the representations

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Three Principals of Adviser Settle SEC Charges Over Undisclosed Conflicts

The Commission filed another settled action based on undisclosed conflicts involving an investment adviser. In this proceeding Respondents, principals of the adviser, failed to disclose a fee splitting arrangement with an executing broker. In the Matter of Gavornki, Adm. Proc.

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Adviser, Co-founder, Settle SEC Breach of Duty Proceeding

The Commission filed settled administrative proceedings against an investment adviser and its co-founder based on a claimed breach of fiduciary duty. The Order alleged violations based on negligence, citing Securities Act Section 17(a)(2) and Advisers Act Section 206(2) and, in

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SEC Prevails in Jury Trial Against IA and Principal

The Commission prevailed in another jury trial this week, securing a favorable verdict against a registered investment adviser, Sage Advisory Group, LLC, and its principal, Benjamin Grant. SEC v. Sage Advisory Group, LLC, Civil Action No. 1: 10-cv-11665 (D. Mass.).

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Jury Convicts Investment Adviser on Multiple Counts of Fraud

An investment adviser is convicted on multiple counts of fraud

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SEC Inspectors Uncover Another Case

The SEC brought an action against an attorney for defrauding advisory clients.

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SEC Files Settled Fraud Action Against Assistant to Adviser

An assistant to an investment adviser settled over billing charges with the SEC.

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Adviser Charged by SEC in Cherry Picking Scheme

The SEC charges an investment adviser, its founder and the COO with fraud centered on a cherry picking scheme and the misuse of soft dollars.

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SEC Charges Investment Adviser, Founder With Fraud Tied to Creation of Fund

An investment adviser and its founder are charged with fraud for convincing a management company to create a series based on an investment strategy that it could not implement.

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SEC Charges Adviser, Principals With Theft From Police-Firefighters

An investment adviser stole money from the Police and Firefighter’s pension fund.

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Hedge Fund Adviser Charged with Fraud For Secretly Restructuring to Favor Select Investors

A hedge fund manager and its principals were charged with fraud for secretly altering the structure of the funds for the benefit of select investors and then raising additional funds without disclosing this to the new investors. The complex eventually

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Two Advisers, Two Portfolio Managers Charged In Market Crisis Cases

Two investment advisers and two portfolio managers were named as Respondents in market crisis related actions centered on claims that a close end fund employed undisclosed high risk trading strategies that caused it to eventually end in liquidation. In the

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As the Market Crisis Unfolded Adviser Turned to Fraud

For over a decade Anand Sekaran successfully operated Wasson Capital Advisors Ltd. Mr. Sekaran was the sole director and president of Wasson which he managed from New York City. He also advised separately managed accounts for other clients and, during

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The SEC Settles Another Significant Market Crisis Case

The SEC settled another significant market crisis case at the close of last week when the founder and president of investment advisory firm ICP Asset Management, Thomas C. Priore and his firm, along with the related entities, agreed to settle

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The Commission brought an action against a state registered investment adviser and its owner and president which arose out of an examination initiated by the Georgia Secretary of State’s Office in 2011. The defendants are Benjamin DeHaan and his controlled

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The Commission filed a settled administrative proceeding with a prominent Latin American focused hedge fund adviser, In the Matter of Quantek Asset Management, LLC, Adm. Proc. File No. 3-14893 (May 29, 2012). The proceeding names as Respondents Quantek Assent Management,

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The SEC and the New York Attorney General settled actions against a major Portuguese Bank based on violations of, respectively, the federal securities laws and the New York Martin Act. The Commission case centers on alleged violations of Securities Act

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Where are the market crisis cases is a long standing question. There have been investigations. Some cases have been brought. Some investigations have been closed. Still, the question remains – where are the market crisis cases? The Commission filed a

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The SEC prevailed in the Second Circuit Court of Appeals, securing the reversal of an order dismissing its claims against the portfolio manager of a mutual fund and the chief operating officer of the fund’s investment adviser. SEC v. Gabelli,

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