SEC Charges Investment Advisory Firm and Firm’s Owner for Breaching Fiduciary Duties to Clients

The Securities and Exchange Commission (SEC) has taken legal action against Timothy Overturf, a resident of Arcata, California, and his investment advisory firm, Sisu Capital, LLC (Sisu Capital), for their breach of fiduciary duties to their clients. The charges stem from their engagement in unauthorized and unsuitable trades within client accounts, a pattern of conduct that extended from December 2017 to at least May 2021. Additionally, the SEC has brought charges against Timothy Overturf’s father, Hansueli “Hans” Overturf, for aiding and abetting the violations committed by his son and Sisu Capital.

According to the SEC’s allegations, both Sisu Capital and Timothy Overturf fell short in fulfilling their obligations to clients on multiple occasions. Initially, the complaint asserts that from 2017 to 2021, Sisu Capital and Timothy Overturf allowed Hans Overturf to provide investment advice to Sisu Capital clients, even though Hans had been suspended by the State of California from offering investment advisory services. The SEC’s complaint further contends that Sisu Capital, Timothy, and Hans executed trades that contradicted client instructions, ultimately benefiting their own interests. This included investing client funds in a thinly-traded bank stock. Allegedly, this stock purchase was part of an undisclosed strategy to accumulate enough shares among Sisu Capital’s clients and the involved parties to facilitate Timothy’s presentation of business partnership ideas to the bank. Additionally, the SEC’s complaint highlights that from 2017 to 2021, Hans recommended a complex financial instrument intended for short-term use. Timothy, on behalf of his clients, acquired this instrument, which clients then held for an extended period. Throughout these actions, Sisu Capital purportedly garnered over $2 million in advisory fees and related compensation.

The SEC’s complaint, submitted in a federal court in San Francisco, accuses Sisu Capital and Timothy Overturf of violating the antifraud provisions outlined in Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Furthermore, the complaint charges Hans Overturf with aiding and abetting his son’s and Sisu Capital’s infractions. The complaint seeks permanent injunctions, disgorgement coupled with prejudgment interest, and the imposition of civil penalties.