What happens when the Chief Compliance Officer requires supervision himself? That was the pertinent question is a recent case that came before the Securities & Exchange Commission and the result was an investment firm losing its registration, on top of the over $800,000 in funds that were allegedly misappropriated.
Eaton & Van Winkle partner Paul Lieberman was quoted in an article run for the May issue of ACA Insight, the publication of the American Compliance Association. An excerpt of where Mr. Lieberman is quoted is below.
“Assuming that the problems as laid out by the SEC are accurate, the improper behavior “apparently went on for years, the red flags were flying,” said Eaton & Van Winkle partner Paul Lieberman.
He also said that the accounting firm, which was not named in the settlement, should have contacted the Buddens sooner with its concerns, and/or reported the matter to the SEC itself…the SEC said that the Buddens did not take any disciplinary action against Cowgill…
…“The principals of a registered adviser must not abandon their duties at any time prior to the actual sale of the firm to new owners,” said Lieberman. “Selling principals remain liable as such until the date of sale and the new owners’ names are listed on Form ADV.”