On December 29, 2011, the SEC instituted an administrative proceeding against an investment adviser and its principal alleging federal securities laws violations. The SEC alleged that the adviser (acting through its principal) misrepresented the amount of assets under management to gain business, as well as allegedly made false and misleading statements on the Form ADV. For example, the SEC alleges that assets under management were reported as growing from $27 million to $200 million, though the actual assets under management were never more than $3 million. The SEC also alleged that marketing material for a fund was misrepresented, including returns for the fund for time periods before the fund commenced operations. The respondents in the case will have an opportunity to file an answer and to dispute the charges against them, that, at this point, are only the SEC's allegations.
Accurate reporting on Forms ADV (as well as the broker-dealer equivalent forms, Form BD and U4) are critically important. Be sure that your ADV, BD and U4 are completed accurately and completely.
