Adviser Fined for Inaccurate Disclosures and Reporting Errors

An investment adviser settled charges with the SEC for inaccurately describing an investment in periodic reports.

In an Order, the SEC stated that the adviser described one of the investment company's investments as being a company "engaged in 'Diversified Financial Services.'" The SEC said that, in actuality, the company was "neither diversified nor a financial services firm." The SEC said that the investment was in a company engaged in print and advertising for the distribution of films, and for funding the associated distribution costs. The SEC also found that in six of the reports filed by the adviser, the adviser inaccurately reflected the coupon rate to be paid by the company.

The SEC concluded that the adviser violated Advisers Act Section 206(4) ("Prohibited transactions by investment advisers") and Rule 206(4)-8 ("Pooled investment vehicles") and Investment Company Act Section 34(b) ("Unlawful representations and names").

To settle the charges, the adviser agreed to (i) cease and desist from further violations, (ii) a censure and (iii) pay a civil money penalty of $2,500,000.