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Regulation and Compliance > Federal Regulation > SEC

Barred CCO Had ‘Complete Lack of Qualifications’ for the Job

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A federal judge in Illinois has ruled that a former chief compliance officer acted recklessly by taking on a compliance role despite “his complete lack of qualifications for that job.”

In a Jan. 21 ruling, the court found that David Goulding, former CCO of The Nutmeg Group LLC, an advisory firm near Chicago, helped the firm commingle investor funds with personal assets, misled investors about the value of their investments, oversaw flawed internal systems and methods for valuing and reporting investments, and transferred investor money to companies controlled by his family.

An Illinois federal court entered a final judgment on Jan. 30 against Goulding.

The Securities and Exchange Commission had previously charged him with fraud.

The court also found that Goulding — who earlier was enjoined from violating the antifraud provisions of Sections 204, 206(1), 206(2), and 206(4) of the Advisers Act — was ordered to pay a total of $28,935 in disgorgement and prejudgment interest to the SEC.

The SEC previously barred Goulding from associating with any registered investment advisor.

The court also entered a final judgment on Jan. 30 against two companies owned by Goulding — David Goulding Inc. and David Samuel LLC — for receiving ill-gotten gains derived from misconduct by Goulding and his father, Randall Goulding.

— Check out SEC Advisor Fraud Charge Shows Hazards of ‘Dual-Hat’ CCOs on ThinkAdvisor.


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