March 9, 1993
TO: INVESTMENT ADVISER MEMBERS NO. 14-93
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 10-93
COMPLIANCE COMMITTEE NO. 5-93
RE: SEC SANCTIONS FOR FRAUD IN CONNECTION WITH ADVISER'S
ADVERTISEMENTS
__________________________________________________________
The Securities and Exchange Commission recently sanctioned
a registered investment adviser and its president for violation
of the antifraud provisions of the Investment Advisers Act in
connection with the adviser's advertisements.
The Commission found that the adviser and its president
violated Section 206(4) of the Advisers Act and Rule 206(4)-1
thereunder by furnishing publishing companies with information
that materially mistated the number of the adviser's clients
and the amount of client assets that it had under management.
While the adviser stated that at various times it had from $1.4
billion to $2.8 billion under management and from 178 to 193
clients, the Commission found that during the same period it had
only between two and four clients, with a total of no more than 7
client accounts, and only between $375,000 and $1.7 million under
management.
Without admitting or denying the allegations, the adviser
and the president consented to cease and desist from further
violations of Section 206(4) and Rule 206(4)-1 and undertook to
notify each of the publishers concerning the true and accurate
number of the adviser's clients, the number of client accounts,
and the amounts of money under management.
Attached is a copy of the Commission's order.
Thomas M. Selman
Assistant Counsel
Attachment