Liar, Liar, SEC Tells Former Adviser
WASHINGTON (CN) - The SEC on Tuesday ordered a former portfolio manager at a Colorado investment adviser to pay $355,000 for forging documents and concealing his personal trades.
The SEC filed an administrative order against Carl D. Johns, 49, of Louisville, Colo. He worked for Boulder Investment Advisers when he did the funny stuff, the SEC said. The company is not a defendant.
According to the cease and desist and sanctions order: "While employed by the Advisers, Johns engaged in active personal trading in securities, including securities of companies held or to be acquired by the Boulder Funds. From 2006 through 2010, Johns executed approximately 850 personal securities transactions. In many instances, Johns held the securities for only a few days. ...
"From 2006 through 2010, Johns failed to comply with the Commission's reporting requirements and the Code of Ethics. Johns did not pre-clear or report approximately 640 of his trades, including at least 91 trades in securities held or to be acquired by the fund, as that term is defined in Rule 17(j)-1(a)(10), and 14 trades that did not comply with the Code of Ethics' restrictions on trading in securities that the Boulder Funds were buying or selling.
"To conceal his personal securities trading, Johns submitted false quarterly and annual reports and falsely certified his annual compliance with the Code of Ethics. Johns' efforts to conceal his trading from the Advisers also included physically altering brokerage statements, trade confirmations, and pre-clearance approvals that were then submitted to the Advisers. ...
"In late 2010, the [Boulder Funds] CCO [chief compliance officer] identified certain irregularities in the documents Johns submitted to the Advisers detailing his personal securities transactions. Based on those irregularities, the CCO made certain inquiries of Johns to ascertain his full compliance with the Code of Ethics.
"In response, Johns misled the CCO. Johns falsely told the CCO that certain of his brokerage accounts were closed, when in fact they remained open and reflected trades that were not pre-cleared as required by the Code of Ethics. Johns also accessed the hard copy file of his previously submitted brokerage statements and physically altered them to create the false impression that Johns' trading was in compliance with the Code of Ethics."
John settled with the SEC by agreeing to disgorge $231,169 plus $23,889 in interest and pay a $100,000, the SEC said.
He also agreed to be barred from the industry for 5 years, but as is customary with SEC settlements, he did not have to admit that he did anything wrong.