SEC Settles a Form 13F Filing Violation for a $100,000 Penalty

August 16, 2007

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Earlier today, the United States Securities and Exchange Commission (“SEC”) issued Investment Advisers Act of 1940 Release No. 2634 (August 15, 2007) announcing its settlement with Quattro Global Capital, LLC, a registered investment adviser to a group of hedge funds, for failing to properly file the Form 13F.

Under Section 13(f) of the Securities Exchange Act of 1934 and Rule 13f-1 thereunder, an institutional money manager, which exercises investment discretion over $100,000,000 of Section 13(f) securities, must report their holdings by filing the Form 13F with the SEC via the EDGAR system each quarter.

The SEC found that Quattro failed to file its quarterly 13F Form with the SEC during the period of February 2002 through May 2005 despite its obligation to do so. Without admitting or denying the SEC’s findings, Quattro consented to an order by the SEC to cease and desist from violating Section 13(f) and SEC Rule 13f-1 thereunder and pay a civil penalty of $100,000.

Since an investment adviser is considered an institutional money manager for purposes of Section 13(f), this settlement is an excellent opportunity for your registered investment adviser firm to review whether it has reached the discretion threshold of $100,000,000 of Section 13(f) securities, which generally includes exchange-traded or NASDAQ-quoted stocks, equity options and warrants, shares of closed-end investment companies, exchanged traded funds and certain convertible debt securities but excludes open-end investment company mutual funds. On the SEC’s website, there’s an official list of Section 13(f) securities.

If your investment adviser firm needs assistance in filing its Form 13F via EDGAR or determining if it has reached the investment discretion threshold of $100,000,000 in Section 13(f) securities, please contact RIA Compliance Consultants to learn more about our services in this area.

Posted by Bryan Hill
Labels: Enforcement, Form 13F