Today, the Securities and Exchange Commission (SEC) has taken action by announcing charges against five investment advisers for their failure to comply with regulations pertaining to the safeguarding of client assets. Additionally, three of these firms have been charged with the untimely updating of SEC disclosures related to audits of financial statements for their private fund clients. All five advisory firms have reached settlements with the SEC and agreed to collectively pay penalties exceeding $500,000.

The advisory firms implicated in this matter are as follows:

  1. Lloyd George Management (HK) Limited
  2. Bluestone Capital Management LLC
  3. The Eideard Group, LLC
  4. Disruptive Technology Advisers LLC
  5. Apex Financial Advisors Inc.

As per the SEC’s findings, these five firms failed to fulfill one or more of the following obligations: conducting necessary audits, delivering audited financials to investors within the stipulated timeframes, and ensuring that client assets were maintained by a qualified custodian. Furthermore, two of the firms neglected to promptly file revised Forms ADV to reflect the receipt of audited financial statements, while one firm inaccurately described the status of its financial statement audits over multiple years when submitting its Form ADV.

Andrew Dean, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, emphasized the significance of the Custody Rule and associated Form ADV reporting requirements in safeguarding investor interests. He stated, “We will continue to ensure that private fund advisers meet their obligations to secure client assets.”

Without admitting or denying the findings, the implicated firms have agreed to the following actions:

  • Accept censure for their actions.
  • Cease and desist from violating the specific provisions that they were charged with.
  • Pay civil penalties, with amounts ranging from $50,000 to $225,000.

This marks the second series of cases initiated by the Commission as part of a targeted investigation into violations of the Investment Advisers Act’s Custody Rule and Form ADV requirements by private fund advisers. The SEC had previously charged nine advisory firms in September 2022 as part of this initiative.

Sonn Law Group is investigating claims regarding Joel Eziekel Blum (CRD #4905379, Goshen, New York). Blum recently submitted an AWC in which he was fined $10,000 and suspended from association with any FINRA member in any capacity for 20 days. See FINRA Case #2014040186601. Blum was associated with Merrill Lynch from May 2008 until his termination in February 2014. Blum has been associated with Ameriprise Financial Services, Inc., since February 2014. The Form U-5 filed by Merrill Lynch to terminate Blum's registration states that he was discharged for "conduct including failure to contact clients in advance of entering orders in non-discretionary accounts and mismarking order tickets as unsolicited." FINRA found that Blum executed discretionary transactions in customer accounts without written authorization to do so. In addition, Blum mismarked order tickets in connection with these transactions, inaccurately indicating that the trades were unsolicited, according to FINRA. In entering into the AWC, Blum neither admitted or denied FINRA's findings. Pursuant to FINRA Rules, member firms are responsible for supervising a broker's activities during the time the broker is registered with the firm. Therefore, Ameriprise or Merrill Lynch may be liable for investment or other losses suffered by Blum's customers. If you were a client of Ameriprise, Merrill Lynch, or Blum, and have suffered investment losses or financial irregularities, please contact Sonn Law Group to explore your legal options. Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies. To learn more, please call us at 844-689-5754 or complete our "contact form."
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