SEC Enforcement: Advisor Charged With Failing to Disclose Conflict of Interest

The Securities and Exchange Commission charged John Leo Valentine, the founder and president of former registered investment advisor firm Valentine Capital Asset Management (VCAM) based in California, with failing to disclose a financial conflict of interest when making an investment recommendation and making other misleading statements to his advisory clients, according to the SEC’s order.

The SEC previously charged Valentine and VCAM in 2010 for failing to fully and adequately disclose a material conflict of interest. VCAM has withdrawn its registration as an investment advisor with the SEC and has ceased all operations.

According to the SEC’s order instituting settled administrative and cease-and-desist proceedings, between late 2011 and 2012, Valentine recommended that his clients sell shares of a fund named Bridgeton Global Directional Fund, LP and buy shares of another fund he created named Valt LP. However, the SEC says that Valentine failed to disclose that he had a financial incentive to make the recommendation because he had recently lost the ability to earn approximately $1 million per year in commissions based on client investments in the Bridgeton fund, but would be compensated based on client investments in Valt.

Without admitting or denying the findings in the SEC’s order, Valentine consented to entry of a cease-and-desist order, to be barred from the securities industry with a right to apply for reentry after two years, and to pay a $140,000 penalty.

Bank Leumi Charged With Conducting Unregistered Cross-Border Business

Israeli-based Bank Leumi agreed to pay $1.6 million and admit wrongdoing to settle charges that it provided investment advice and induced securities transactions for U.S. customers for more than a decade without registering as an investment adviser or broker-dealer as required under U.S. securities laws, according to the SEC.

The SEC found that Bank Leumi maintained several hundred securities accounts that were beneficially owned by U.S. customers and managed more than $500 million in securities assets for U.S. customers.

Energy Services Company and Execs Charged With Fraud

The SEC charged Lime Energy Co., an energy services provider, and four executives for their roles in an accounting fraud, which included the improper reporting of “a significant amount of fake revenue,” according to the announcement.

Lime Energy Co. agreed to pay $1 million to settle the charges, and its four now-former executives also agreed to settlements.