September 27, 2013

Excessive Advisory Fee Case Brought by SEC

The SEC filed an action in federal court in the Western District of North Carolina, charging Frank Dappah of Charlotte, North Carolina, and his firm, Yatalie Capital Management, a sole proprietorship, with charging grossly excessive fees to their advisory clients without authorization or notice and other violations. The SEC alleges that Dappah and his firm took from the clients' fees far in excess of what they were entitled to under the client advisory agreements. The SEC alleges that between March 2012 and July 2013, Dappah took advisory fees of nearly $75,000 on assets under management averaging around $205,000. One client, according to the complaint, lost $9200 in unauthorized fees to Dappah in less than a year on investments of around $23,000.

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September 27, 2013

Florida Adviser Charged with Misrepresenting

The SEC brought an administrative action against OM Investment Management LLC, located in Tampa, Florida, and its principal, Gignesh Movalia, and its director of investments, Edwin V. Gaw, with fraudulently raising money and making material misrepresentations and omissions relating to an unregistered hedge fund. According to the SEC, the adviser and its principals made material misrepresentations and omissions concerning:

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September 27, 2013

Treasury Releases Report on Systemic Risk Posed by the Asset Management Industry

The Dodd-Frank Wall Street Reform and Consumer Protection Act established the Office of Financial Research (OFR) within the U.S. Treasury Department to improve the quality of financial data available to policymakers and to facilitate better and more sophisticated analysis of the financial system. The OFR recently delivered this report, “Asset…

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September 21, 2013

New York Adviser Charged with Insider Trading

The SEC brought an administrative actions against Tibor Klein, the owner of a New York-based advisory firm, claiming that he engaged in illegal insider trading in his own account and client accounts based on non-public information in advance of a merger announcement by pharmaceutical companies. Klein is president of Klein…

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September 18, 2013

UIT Sponsor Charged with Misleading Investors

The SEC brought an administrative action against Sarkauskas & Associates, Inc., a Wisconsin-based investment adviser, and its principal, James Sarkauskas, finding that they violated Sections 206(1) and (2) of the Advisers Act when they purchased unit investment trust (UIT) units bearing transactional sales charges in their clients' accounts without disclosing…

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September 17, 2013

OCIE Issues Short Selling Risk Alert

The SEC’s  Office of Compliance Inspections and Examinations (OCIE) issued its latest Risk Alert, this time focusing on controls to ensure that financial firms engaging in short sales in securities comply with Rule 105 of Regulation M. That rule generally prohibits purchasing securities in follow-on and secondary offerings when the…

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September 12, 2013

IM Director Speaks About Hedge Fund Regulation

Norm Champ, the Director of the SEC’s Division of Investment Management, spoke at the PLI Hedge Fund Management Conference in New York about his division’s priorities with respect to hedge fund regulation. He discussed the regulatory landscape for hedge funds and their advisers.  He noted that the Dodd-Frank Act imposed…

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September 11, 2013

Atlanta-Based Adviser Charged with Misappropriating Client Funds

The SEC charged Paul Marshall, a state-registered investment adviser representative, and three Atlanta-based companies that he owned and controlled, Bridge Securities, LLC, Bridge Equity, Inc. and FOGFuels, Inc. with misappropriating client funds. According to SEC, since at least 2011, Marshall, an investment adviser representative of the Bridge entities, misappropriated at…

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September 6, 2013

SEC Brings Fair Disclosure Enforcement Action

The SEC charged Lawrence D. Polizzotto, the former head of investor relations for Firs Solar Inc., a Tempe, Arizona based solar energy company with violating rules requiring fair disclosure of information when he alerted certain analysts and investors about an upcoming major development. Regulation FD requires material nonpublic information to…

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