The Securities and Exchange Commission announced Wednesday that it has charged Sands Brothers Asset Management and three of the firm’s top officials — including its chief compliance officer — with violating the custody rule by failing to provide timely statements on the firm’s private funds.
The SEC’s Enforcement Division alleges that Sands Brothers has been “repeatedly late” in providing investors with audited financial statements of its private funds, and that the firm’s co-founders Steven Sands and Martin Sands along with Christopher Kelly, the firm’s chief compliance officer and chief operating officer, were responsible for the firm’s failures to comply with the custody rule.
The SEC also charged Sands Brothers with custody rule violations related to its private funds in 2010.
Sands Brothers has offices in Greenwich, Connecticut, New York City, and Tiburon, California.
“The custody rule is not a technicality,” said Andrew Calamari, director of the SEC’s New York Regional Office, in a statement. “It is a critical investor protection provision designed to help ensure that investor assets are safe. Sands Brothers and its senior-most officers have persistently disregarded their obligations under the law and left their clients waiting for months at a time to have the materials they need to verify the existence and value of fund assets.”