SEC Issues Administrative Ruling on Westend Capital Management, LLC
Targeted News Service |
In the Matter of
ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, PURSUANT TO SECTIONS 203(e) AND 203(k) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER
I.
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over Respondent and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Administrative and Cease-And-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-And-Desist Order ("Order"), as set forth below.
III.
On the basis of this Order and Respondent's Offer, the Commission finds1 that Summary From
Respondent
1.
Other Relevant Entity and Individual
2.
3.
Background
4. Formed in 2002,
5.
Misappropriation of Fund Assets by Cooper
6. The Fund's offering circular stated that
7. In
8. Cooper had sole authority to transfer money out of the Fund and there were no controls in place to prevent him from improperly withdrawing funds. Cooper routed the money first through
9. In Summer 2012, after they had confirmed Cooper's misappropriation,
10. The Advisers Act requires that registered investment advisers adopt and implement written policies and procedures reasonably designed to prevent violations of the statute. While
11. For example,
12.
13. The Advisers Act also requires that registered investment advisers review, no less frequently than annually, the adequacy of their compliance policies and the effectiveness of their implementation. Similarly,
14. In
WestEnd Failed to
15. The Advisers Act requires registered investment advisers to make and keep certain books and records relating to its advisory business.
False Statement in
16. On
As discussed above, this statement was false, because Cooper indiscriminately withdrew purported management fees in excess of the annual 1.5% in 2010, 2011, and 2012.
Violations
17. As a result of the conduct described above,
18. As a result of the conduct described above,
19. As a result of the conduct described above,
A journal or journals, including cash receipts and disbursements, records, and any other records of original entry forming the basis of entries in a ledger;
General and auxiliary ledgers (or other comparable records) reflecting assets, liability, reserve, capital, income and expense accounts;
All trial balances, financial statements, and internal audit working papers relating to the business of such investment adviser; and
All written communications sent or received relating to, among other things, any receipt, disbursement or delivery of funds or securities.
<p>
20. As a result of the conduct described above,
or willfully to omit to state in any such application or report any material fact which is required to be stated therein." Remedial Efforts 21. In determining to accept the Offer, the Commission considered remedial acts promptly undertaken by
Undertakings Respondent WestEnd has undertaken to: 22. Compliance Consultant. In
a. The Consultant conducted an on-site review of
b. The Consultant drafted a new compliance manual and code of ethics and established a protocol for undertaking various compliance-related tasks on a periodic basis.
c. The Consultant will conduct annual compliance reviews ofWestEnd, at
In determining whether to accept this Offer, the Commission has considered the undertakings described in Paragraph 22.
23. Recordkeeping. Respondent shall preserve for a period of not less than six (6) years from the end of the fiscal year last used, the first two (2) years in an easily accessible place, any record of Respondent's compliance with the undertakings set forth in this Order.
24. Notice to Advisory Clients. Within thirty (30) days of the entry of this Order, Respondent shall provide a copy of the Order to each of the limited partners in the Fund as of the date of the Order via mail, email, or such other method as may be acceptable to the Commission staff, together with a cover letter in a form not unacceptable to the Commission staff.
Furthermore, for a period of twelve (12) months from the entry of this Order, to the extent that Respondent is required to deliver a brochure to a client and/or prospective client pursuant to Rule 204-3 of the Advisers Act, Respondent shall also provide a copy of this Order to such client and/or prospective client at the same time that Respondent delivers the brochure.
25. Deadlines. For good cause shown, the Commission staff may extend any of the procedural dates relating to the undertakings. Deadlines for procedural dates shall be counted in calendar days, except that if the last day falls on a weekend or federal holiday, the next business day shall be considered to be the last day.
26. Certifications of Compliance by Respondent. Respondent shall certify, in writing, compliance with its undertakings set forth above. The certification shall identify the undertakings, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The Commission staff may make reasonable requests for further evidence of compliance, and Respondent agrees to provide such evidence. The certification and supporting material shall be submitted to
IV.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent's Offer.
Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: A. Respondent
B. Respondent
C. Respondent shall, within ten days of the entry of this Order, pay a civil money penalty in the amount of
Schneider,
D.
By the Commission.
Assistant Secretary
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
2 Cooper is contesting the Commission's allegations against him in a separate proceeding.
3 A willful violation of the securities laws means merely "'that the person charged with the duty knows what he is doing.'" Wonsover v.
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SEC Issues Administrative Ruling on Sean C. Cooper
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