SEC Alleges Former Employee of Investment Adviser Aided and Abetted the Violation of SEC Rule 204-2 (Books & Records Requirements)

June 13, 2011

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On June 6, 2011, the U.S. Securities and Exchange Commission (“SEC”) charged a long time employee at Bernard L. Madoff Investment Securities LLC (“BMIS”) with “aiding and abetting  violations of Section 204 and Rule 204-2 of the [Investment] Advisers Act [of 1940] (Adviser Books and Records Violations).” The SEC’s complaint alleges that BMIS, “failed to make, maintain on its premises, or keep accurate, certain books and records required by law.” The SEC cites several examples where the firm failed to maintain accurate cash receipts, disbursement records, accurate ledgers, and failed to keep true and accurate bank statements, cancelled checks and cash reconciliations. The allegations against the former employee of BMIS contend that the employee aided and abetted violations of Sections 204, 206(1) and 206(2) of the Investment Advisers Act of 1940 and Rule 204-2 thereunder. The SEC contends that as an employee in the investment advisory operations, the former BMIS employee assisted in falsifying documents, making repeated material misrepresentations, and generated fictitious account statements; thus, violating the Investment Advisers Act of 1940, Rule 204-2 and thereunder and perpetuating the firm’s violations.

For more information to help your firm maintain compliance with SEC Rule 204-2 of the Investment Advisers Act of 1940, please register to attend our webinar, “Maintaining Investment Advisor Books and Records.” The webinar will be presented on July 14, 2011 at 12:00 pm CDT for a fee of $59.95.  To register now click here.

Posted by Bryan Hill
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