WASHINGTON (Reuters) - Three investment advisers and their owners agreed on Wednesday to settle civil charges that they had repeatedly failed to address compliance problems, in a case that stems from a broad crackdown by U.S. regulators into compliance failures by asset managers.
The U.S. Securities and Exchange Commission said that Modern
Portfolio Management Inc., Equitas Capital Advisers LLC, and Equitas Partners LLC would each pay financial penalties and hire compliance consultants to resolve the charges.
The case was brought by a unit in the SEC’s enforcement division that specializes in asset management, one of several specialized areas created in the wake of the financial crisis and the Bernard Madoff Ponzi scheme.
The unit has stood out for its approach to pursuing cases, which has involved a mix of responding to referrals from examiners and broader initiatives that look for compliance failures in high-risk areas like fee arrangements, board governance and conflicts of interest.
The SEC said Wednesday’s case stems from an initiative launched two years ago that targets repeat offenders who fail to fix compliance problems identified by SEC examiners.
The firms charged had compliance programs that “were not adequate to prevent misleading statements in marketing materials or inadvertent overbilling of clients,” said Andrew Ceresney, a co-director of the SEC’s enforcement division.
Modern Portfolio Management and its owners, G. Thomas Damasco II and Bryan Ohm, agreed to pay $175,000 (108,191 pounds) and to undergo compliance training.
The SEC also sanctioned Equitas Capital Advisers and Equitas Partners, owner David S. Thomas, Jr., chief compliance officer Susan Christina, and former owner and chief compliance officer Stephen Derby Gisclair.
Equitas Capital Advisers and Crescent Capital Consulting LLC, an advisory firm opened by Gisclair in 2010, were both ordered to repay clients who were overbilled.
Equitas Capital Advisers, Thomas and Gisclair also agreed to pay a total of $225,000 in additional penalties.
An attorney for Modern Portfolio Management Inc. and its owners declined to comment.
Attorneys for the other defendants could not be immediately reached for comment.
Editing by Bernadette Baum