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SEC Charges Former Advisory Firm, CEO With Bribing College Athletes

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What You Need to Know

  • The CEO, Munish Sood, directly and indirectly paid more than $96,000 to influence prospective clients to retain PWM.
  • Sood influenced amateur athletes to retain PWM as an investment advisor after they turned pro, the SEC says.
  • PWM failed to disclose the referral payments before prospects signed the advisory agreements.

The Securities and Exchange Commission has issued a cease-and-desist order against a former investment advisory firm and its CEO for participating in what the regulator said was a widespread bribery scheme that misled a number of prospective clients who were past, present and prospective NCAA Division I college athletes.

In its order, released Thursday, the SEC states that between February 2016 and September 2017, Rosedale Asset Management LLC, formerly Princeton Advisory Wealth Management LLC, a registered investment advisor, through the actions of its CEO Munish Sood, directly and indirectly made at least 20 payments totaling more than $96,000 to individuals and entities who would “influence amateur athletes to retain PWM as an investment advisor after they turned pro and had money to invest, or introduce Sood to others who, in exchange for additional payments, would influence these same prospective clients to retain PWM.”

As a result, “at least five former NCAA (now professional) basketball players signed advisory agreements with PWM,” the order states. “PWM failed to disclose to the prospective clients the facilitating referral payments before they signed the advisory agreements.”

According to the order, from at least March 2015 through Oct. 23, 2017, Sood owned at least 95% of PWM, and served as its CEO, Chief Investment Officer and control person.

In October 2017, PWM legally changed its name to Rosedale Asset Management, LLC and Sood divested his direct ownership, the SEC said.

From January 2012 through February 2018, Sood was also associated with PWM.

On Aug. 27, 2018, Sood pleaded guilty to criminal counts of: (a) conspiracy to commit bribery, honest services fraud, and travel act offenses; (b) payments of bribes to an agent of a federally funded organization; and (c) wire fraud conspiracy.

In September 2019, the U.S. District Court for the Southern District of New York ordered Sood to pay a criminal fine of $25,000 for his offenses.

On Oct. 31, 2019, the court ordered Sood to pay restitution of $28,261 to one NCAA Division I university that was the victim of the wire fraud conspiracy, and his liability is joint and several with certain criminal defendants.

The order states that “PWM never entered into any written agreements concerning the cash solicitations, and PWM’s prospective clients were not provided with a written disclosure document that identified the solicitor, the investment adviser, the nature of their relationship, and the terms of the compensation arrangement.”

As a result of the conduct, PWM, according to the SEC, “violated Sections 206(1) and 206(2) of the Advisers Act, which prohibit investment advisers from directly or indirectly employing any device, scheme, or artifice to defraud any client or prospective client, or engaging in any transaction, practice, or course of business which operates as a fraud or deceit on any client or prospective client.”