February 8, 1993
TO: INVESTMENT ADVISER MEMBERS NO. 11-93
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 6-93
COMPLIANCE COMMITTEE NO. 4-93
RE: SEC SANCTIONS ADVISER FOR BOOKS AND RECORDS VIOLATIONS
__________________________________________________________
The Securities and Exchange Commission recently sanctioned
an investment adviser and its sole proprietor for committing
books and records and reporting violations under the Investment
Advisers Act of 1940. In October, Douglas Scheidt, Assistant
Director, Office of Enforcement Liaison in the Division of
Investment Management, gave a speech in which he emphasized that
this and other books and records cases reflect the importance
that the Commission attaches to the books and records provisions.
He also said that he would not be surprised to see other books
and records cases in the future. A copy of the Commission's
order is attached.
The Commission found that in three different examinations
the adviser had failed to provide certain ledgers and trial
balances related to the advisory business (the "Required Books").
The Commission also found that the adviser had failed to file
timely amendments to its Form ADV, stating that (1) it offers
investment advisory services for a percentage of assets under
management and (2) Oregon had issued a cease and desist order
against the sole proprietor and fined him $750. Finally, the
Commission found that the adviser had failed to file timely
annual reports with the Commission.
Without admitting or denying the Commission's findings, the
adviser and sole proprietor consented (1) to cease and desist
from further violations of Section 204 of the Investment Advisers
Act and Rules 204-2(a)(2) and (6), Rule 204-1(b)(1), and Rule
204-1(c); (2) to retain a qualified person to establish and
maintain the Required Books or to retain a qualified person to
train an employee to do so; and (3) to notify the Commission that
those actions had been taken.
Thomas M. Selman
Assistant Counsel
Attachment