Adviser Claimed that Funds were “SEC Approved”
The principal of an investment adviser pled guilty to conspiracy to commit mail and wire fraud and was barred from the industry for making misleading statements to investors including claims that its funds were “SEC approved”. The firm was also charged with lying to clients about performance, falsifying account statements, and misappropriating assets. The SEC indicated that it does not approve of funds or investments.
OUR TAKE: The regulators always take exception when firms claim or even suggest that a firm or recommended investments are “approved.” Registration does not mean approval, and the regulators view any suggestion to the contrary as materially misleading.