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Day: July 3, 2017

Adviser’s Form ADV Inflated Assets to Claim SEC Registration Eligibility

An investment adviser was fined and barred from the industry for falsely claiming SEC registration eligibility, along with several other Advisers Act violations.  The SEC asserts that the respondent filed multiple Form ADVs claiming over $100 Million in AUM and SEC registration eligibility even though the firm had only $4 Million in AUM. The SEC also charges the firm with misappropriating client assets, failing to comply with the custody and recordkeeping rules, and charging excessive fees.

OUR TAKE: Whether to register with the SEC or the relevant state is not a discretionary decision.  Either you have $100 Million in AUM or you don’t.  Lying on a Form ADV about SEC registration eligibility will result in a public enforcement action, censure and fines.

https://www.sec.gov/litigation/admin/2017/33-10384.pdf