Adviser’s Registration Revoked for Ignoring SEC Exam Staff
The SEC revoked the registration of an adviser who ignored requests from the SEC’s examination staff for books and records. The respondent promised, but did not deliver, books and records, and ignored staff efforts to contact him. The respondent did turn over some books and records following delivery of a subpoena. The SEC charged violations of Section 204(a) which requires the production of required books and records. The SEC also charged the respondent with misleading statements in the Form ADV.
OUR TAKE: Registration is a privilege, not a right. The SEC has broad examination and enforcement discretion, including the right to put an adviser out of business. An adviser cannot ignore requests for records required under the Advisers Act. It’s better to confess that you don’t have the requested records.