Financial Advisers Sued for Misrepresenting Credentials and Qualifications


The SEC is going after advisory firms and their principals that misrepresent facts that bear on their experience and credentials on form ADVs. Such violations suggest an intent to mislead investors. (“ADV crackdown on, as SEC says firm claimed $200M in AUM, had $3M,” InvestmentNews).

The SEC filed an administrative complaint against Calhoun Asset Management LLC and Krista Lynn Ward of Chicago for inducing investors to invest in two funds of hedge funds managed by the firm by “grossly exaggerating” the firm’s assets under management and making other false and misleading statements, according to the article. Ward allegedly told one asset management firm that Calhoun had $200 million in assets under management in 2006, when it actually had at most $3 million under management at that time. The asset manager had 20 of its clients invest in the Calhoun funds.

Ward allegedly held herself out as an experienced hedge fund manager, despite having no such experience, and filed numerous false Form ADVs for Calhoun, including one that represented that Calhoun had $79.8 million in assets under management in February 2009, when it had only $7 million. She also allegedly misrepresented that another Chicago investment adviser where she was the chief executive had $300 million under management, when it had none.

“We believe it’s important to take action when an adviser is inflating assets under management in an attempt to attain clients,” John Sikora, assistant director of the SEC’s Chicago regional office, was quoted as saying.

Page Perry is an Atlanta-based law firm with over 170 years collective experience protecting investor rights and fighting Wall Street greed.