Adviser Allowed Former Principal to Circumvent Industry Bar
The SEC commenced enforcement proceedings against a barred adviser, his former firm, and the firm’s principal for allowing him to continue to associate with the firm and provided investment advice despite the bar. The barred adviser sold his firm to his son following an SEC investigation that led to his industry bar. Regardless, the SEC alleges that the barred adviser continued to operate an associated business out of the same office space, advised firm clients about investments, made changes to investment accounts, and even impersonated his son on calls with the firm’s custodian/broker. The SEC criticizes the firm and the son for permitting and encouraging the activity and for failing to properly inform clients about the father’s industry bar and role with the firm.
OUR TAKE: The SEC takes its industry bars seriously. The regulator will prosecute attempts to circumvent bars and will hold registrants accountable for facilitating violations.