SEC Issues Cease and Desist Proceedings for Failing to Allow SEC Staff to Examine Business Records

September 25, 2007

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On September 24, the U.S. Securities & Exchange Commission (SEC) issued an order instituting administrative and cease-and-desist proceedings against a registered investment adviser for refusing to produce or allow for the inspection of the firm’s advisory business.

In the Matter of Amaroq Asset Management, LLC and Dwight Andree Sean Oneal Jones (Investment Advisers Act of 1940 Release No. 2651 / September 24, 2007; Administrative Proceeding File No. 3-12822), the SEC alleges Amaroq Asset Management (Amaroq) repeatedly failed to cooperate with the SEC during the SEC’s attempt to conduct routine registered investment adviser examinations. Initially, Amaroq’s owner, Dwight “Sean” Jones, initially failed to even respond to the SEC and then later claimed his books and records were, first, destroyed in a fire, and then second, inadvertently sold by a storage company. Mr. Jones then claimed the firm ceased conducting business operations in 2004.

However, the SEC order claims that Amaroq continued to hold itself out to the public, through its website, as an investment adviser subject to SEC examinations. The order states Amaroq failed to file a Form ADV – W and that as of the date of the order, the firm was still registered with the SEC. The SEC further alleges Amaroq failed to update its Form ADV Part 1A through the Investment Advisor Registration Depository. Amaroq did not file an annual amendment to Form ADV Part 1A for fiscal years 2004, 2005, and 2006, nor did it file amendments to notify the SEC of changes in address and contact information.

This SEC order is another example of the importance of filing timely Form ADV amendments and cooperating with the SEC during routine examinations. More importantly, it is a reminder that a registered investment adviser must file a Form ADV-W in order to officially notify regulators of the firm’s intent to cease offering investment advisory services and to terminate its investment adviser registration. If your registered investment adviser needs help filing its Form ADV amendments or help preparing for an SEC examination, please contact RIA Compliance Consultants, Inc., for more information about our services.

Posted by Bryan Hill
Labels: Enforcement, Form ADV