• Skip to primary navigation
  • Skip to main content
Logo
Open search bar
  • About
    • Todd Cipperman
    • Why Choose Us
  • Services
    • Money Managers
    • Registered Funds
    • Private Equity
    • Broker-Dealers
    • CyberSecure - Funds
  • In The News
  • Outsourced CCO
  • Client Engagement
  • Resources
    • Helpful Information
    • Regulatory Exams
    • Executive Interviews
    • Blog
    • Podcasts & Videos
    • Best Practices
  • Contact Us

Our Take Blog

Home
Our Take Blog
SEC Faults Firm for Failing to Uncover Principal’s Lies about Personal Loan 

SEC Faults Firm for Failing to Uncover Principal’s Lies about Personal Loan 

The SEC fined and censured a pension consulting firm for failing to disclose the conflict of interest arising from a personal loan received by its principal from a money manager the firm recommended.  According to the SEC, the principal failed to disclose the loan until the compliance department discovered the transaction several months later.  When asked about the loan, the principal lied about its purpose and repayment.  When the SEC uncovered the transaction two years later, the firm added ADV disclosure but included misrepresentations based on the principal’s statements.  The firm failed to verify the principal’s statements when the compliance department discovered the loan and when it added ADV disclosure.   The SEC has also brought charges against the principal.

OUR TAKE: Trust, but verify.  The regulators may not allow a firm or its compliance personnel to rely on statements or certifications especially related to conflicts of interest transactions.  This heightened standard clearly makes the job more complicated.  Also, lying to the compliance department will only get a wrongdoer in deeper trouble once the SEC uncovers the issue.

http://www.sec.gov/litigation/admin/2015/ia-4000.pdf

Back to Top
logo
480 E. Swedesford Road, Suite 220, Wayne, PA 19087
610-687-5320
LinkedIn Twitter
© 2020 Marlivia Properties LLC