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 entity, Lighthouse Financial Partners, LLC. SEC v. Dehaan, Civil Action No. 1:12-cv-01996 (N.D.Ga. Filed June 11, 2012).

Lighthouse is an investment adviser operated by Mr. DeHaan. The firm advertise through a website and videos posted on YouTube. Lighthouse supposedly has a core philosophy of limiting risk. It also claims to have developed an algorithm which indicates when to exit a stock. Accordingly, investors are told that the firm has successfully outperformed it’s benchmark goals since 2004. No examples are provided.

When the examination began, Lighthouse furnished Georgia officials with documents regarding its accounts. In February 2012 the firm furnished the examiner with materials listing 114 client accounts with about $39 million in assets under management.

The accounts and assets could not be verified for the most part. Between January 2011 and May 2012 however the defendants transferred $1.2 million from client accounts into a “pass through” account under the control of Mr. DeHaan. Clients were told that the funds were being moved to open TD Ameritrade custodial accounts for them. The representation was false. The new accounts were never opened.

Subsequently, Defendants deposited personal funds into the “pass through” account. About $1.7 million was then moved from that account into a personal account or other business accounts apparently to pay expenses. About $600,000 was deposited into the trust account of Mr. DeHaan’s attorneys to be held for the benefit of Lighthouse advisory clients. About $600,000 in client funds are unaccounted for.

Mr. Dehaan provided the staff with false bank account statements for the “pass through” account. When advised of this difficulty, counsel for the defendants produced the bona fide statements on June 5, 2012. Those documents confirm Mr. DeHaan falsified the earlier records.

The complaint alleges violations of Sections 206(1) and (20 of the Advisers Act. The defendants have offered to consent to the entry of a preliminary injunction and a freeze order.

Program: Webcast by Thomas O. Gorman: How Corporate Officials Can Get A Good Night’s Sleep Despite Current SEC Enforcement Trends, presented by Celesq and West Legal Ed, June 14, 2012 from 12 -1:00 p.m. EST. For further information please click here.

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