Investment adviser pleads guilty to lying to SEC officials during an examination - .PDF file.
On 13 September 2013, the Securities and Exchange Commission (SEC) charged Fredrick D Scott, the owner of a New York-based investment advisory firm, with defrauding investors while exaggerating the amount of assets under his management. On the same day, in a parallel criminal action in the Eastern District of New York, Scott pled guilty to making materially false statements to the SEC in the course of an examination. These cases serve as a reminder of the government’s aggressive pursuit of fraudulent investment advisers, including its willingness to bring criminal charges based on statements made during an examination.
The SEC alleges that Scott, the chief executive officer of ACI Capital Group, an SEC-registered investment adviser, touted ACI’s registered status to gain credibility with potential investors when ACI was not in fact a viable investment advisory business. Furthermore, Scott falsely claimed to have $3.7bn (£2.3bn) in assets under management and ‘continued his web of lies’ when confronted by the SEC during an examination. Specifically, Scott stated in writing to SEC exam staff that no person other than Scott had loaned money to ACI, when in fact Scott knew that an investor had loaned $100,000 to ACI. The SEC examiners notified the agency’s Enforcement Division, which investigated and referred the matter to criminal authorities…
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