Adviser Failed to Disclose Personal Financial Problems
A state registered adviser was barred from the industry for failing to disclose a personal bankruptcy on Form ADV in addition to other charges. The Colorado Securities Commissioner cited a Form ADV that contained material omissions about the respondent’s 2017 personal bankruptcy and otherwise misrepresented his qualifications. The CSC also charged the respondent with overcharging clients and intentionally concealing the misconduct. The SEC also barred the adviser from the industry.
Form ADV, Item 18.B. specifically requires investment advisers to “disclose any financial condition that is reasonably likely to impair your ability to meet contractual commitments to clients.” Item 18.C. also requires the disclosure of any bankruptcy petition during the prior 10 years. As investment advisers struggle financially, compli-pros should assess whether the firm needs to enhance its financial condition disclosure.