September 22, 2014

Dually Registered Adviser Found to Have Ignored Red Flags of Illicit Insider Trading

The SEC brought an enforcement action against Wells Fargo Advisors, LLC, a dually registered investment adviser and broker-dealer, for failing to implement and maintain adequate insider trading policies and procedures.

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September 18, 2014

Adviser Charged with Engaging in Prohibited Principal Trades through Its Affiliated Broker-Dealer with Clients

The SEC brought an enforcement action against Strategic Capital Group, LLC (SCG), an investment adviser based in Gig Harbor, Washington, for engaging in more than 1,100 principal transactions through its affiliated broker without providing requisite disclosures to clients or first obtaining their consent. The SEC also found violations related to placing trades with an affiliated broker-dealer, presenting false and misleading performance advertisements and the firm’s CCO failure to prevent such violations.

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September 10, 2014

SEC Brings Form 4 Enforcement Action

The SEC brought an administrative action against Salim Ghauri, a director and officer of NetSol Technologies, Inc. (NetSol), for violations of the beneficial ownership reporting requirements of the federal securities laws. Section 16(a) of the Exchange Act and the rules promulgated thereunder require officers and directors (called insiders) of a company with a registered class of equity securities, and any beneficial owners of greater than 10% of such class, to file certain reports of securities holdings and transactions. Ghauri, because of his positins at NetSol, is subject to the reporting requirements of Section 16(a) of the Exchange Act.

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September 10, 2014

Officer Fined $60,000 for Failing to File Amended 13G Reports and Form 4s

The SEC brought an enforcement action against Raul S. McQuivey,an officer and director of Sutron Corporation (Sutron) and as a greater than 10% beneficial owner of Sutron’s registered common stock, for: (1) violating Section 13(g) of the Securities Exchange Act of 1934 on multiple occasions by failing to timely file required amendments to the Schedule 13G; and (2) Section 16(a) on multiple occasions by failing to timely file reports of holdings and transactions in Sutron’s securities.

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September 10, 2014

NASAA Releases a Study on How Mid-Sized Advisers Have Addressed Cybersecurity Risks

The North American Securities Administrators Association (NASAA) released results of a survey conducted in July 2014 addressing the cybersecurity practices of state-registered investment advisers. Such advisers account for more than half of the registered investment advisers conducting business in the U.S. The survey covered 440 registered investment advisers with assets under management of less than $100 million. Investment advisers from nine states participated in the survey.

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September 9, 2014

SEC Brings Action Against Adviser for Causing Hedge Fund to Reimburse It for Fake Expenses

The SEC alleged that Steven R. Markusen, the owner of Archer Advisors LLC, an adviser to hedge funds, and Jay C. Cope, an employee of Archer Advisors, implemented a scheme that bilked investors in two hedge funds out of more than $1 million under the guise of research expenses and fees.

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September 8, 2014

SEC Brings Enforcement Action Against Adviser for Making Errors in Client Account Statements

The SEC brought an enforcement action against Douglas E. Cowgill, a resident of Columbus, Ohio, for sending clients account statements with errors. Cowgill has been the sole owner and President of Professional Investment Management, Inc. (PIM), an investment adviser that was registered with the SEC from 1978 until September 30, 2013. He also has been PIM’s Chief Compliance Officer since September 2004.

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September 5, 2014

SEC Brings Case Against an Adviser Rep Who Uses Firm’s Billing System to Misappropriate Client Funds

The SEC brought an administrative action against John Pappas, who was employed as a registered representative and an investment adviser representative with Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch), a registered investment adviser and broker-dealer located in Birmingham, Alabama.  From November 2000 through June 2003, he was a registered…

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September 1, 2014

Access to Client Brokerage Accounts Allows Adviser to Misappropriate Client Funds

The SEC brought an administrative action against Brian K. Velten, who from 2009 through 2012, was an unregistered investment adviser who resided in Tampa and Miami, Florida during this time. Velten would receive money from clients, open accounts in their names at Fidelity Brokerage Services, LLC (Fidelity), trade securities on…

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