The Securities and Exchange Commission has instituted enforcement proceedings against an advisor that it says falsely claimed he was eligible for SEC registration and also solicited clients using false Form ADVs.
According to the SEC’s cease-and-desist order against Robert Wilson and his firm Black Diamond Asset Management, Wilson initially registered by claiming that Black Diamond had more than $583 million in assets under management and at least 26 discretionary accounts, but a year later changed the firm’s Form ADV to claim eligibility as a midsize advisor with $25 million to $100 million in AUM domiciled in New York and/or Wyoming.
The SEC, however, maintains that the advisor never had any clients or assets under management.
“In reality, Black Diamond has never obtained any advisory clients, has never held any assets under management, and has never met the minimum requirements for investment adviser registration with the Commission,” the SEC order states.
The SEC further accused the advisor of soliciting clients using false ADVs.
“SEC registration has become a qualifying criterion for larger clients who feel more secure with an SEC-regulated firm that has more than $100 million in AUM,” stated Cipperman Compliance Services in commenting on the cease-and-desist order. “Consequently, firms may feel the pressure to stretch their numbers to qualify, which could result in a painful enforcement action. There is no shortcut to success.”
— Check out Shkreli Decries ‘Witch Hunt’ After Convicted of Securities Fraud on ThinkAdvisor.