SEC Charges Two Advisory Firms for Custody Rule Violations Among Other Violations
What happened?
On September 9, 2022, the Security and Exchange Commission (“SEC”) charged several investment advisers who failed to comply with requirements regarding safekeeping client assets, and/or to timely update their SEC disclosures to reflect the status of audits of financial statements for the private funds they advise according to an SEC press release.
The Advisers charged by the SEC all agreed to settle paying combined penalties of over $1 million. The Advisers included are BiscayneAmericas Advisers L.L.C., Garrison Investment Group, LP, Janus Henderson Investors US LLC, Lend Academy Investments, LLC, Stewardship Capital Management, Inc., and Titan Fund Management, LLC.
“According to the SEC’s orders, certain advisers failed to have audits performed or to deliver audited financials to investors in certain private funds in a timely manner, thereby violating the Investment Advisers Act’s Custody Rule, and certain advisers failed to promptly file amended Form ADV to reflect they had received audited financial statements after having initially reported that they had not yet received the audit reports. In addition, one adviser did not properly describe the status of its financial statement audits when filing its Form ADV, nor did it update its response in its Form ADV annual updating amendment for multiple years, as required.”
“Non-compliance with the Custody Rule creates significant risks for the safety and security of client assets,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “These actions show that the Commission expects private fund advisers to meet their obligations to secure client assets and will pursue those who fail to do so. These matters also presented a unique circumstance for promptly resolving our investigations with this group of advisers. Counsel should not assume that the Division will recommend similar resolutions going forward.”
To read the full press release, click here.
What does this mean for me?
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