Adviser Prosecuted for Filing with SEC without $25 Million AUM
The SEC has instituted enforcement proceedings against an investment adviser that falsely claimed assets under management in excess of $25 Million in order to register with the SEC instead of the State of Georgia. The SEC charges violations of Rule 203A-2(d), which prohibits SEC registration as an investment adviser unless the adviser has $25 Million in AUM within 120 days of registration. The SEC alleges that the respondent never had any AUM and filed amended ADVs with false AUM numbers and representations.
OUR TAKE: The SEC does not often file enforcement actions for violations of the jurisdictional rule. The SEC usually just tells you to withdraw and file with the state. This will become a much bigger issue starting in July 2011 when the SEC filing threshold jumps to $100 Million.