Two financial advisory firms have been sanctioned for impeding examinations by the Securities and Exchange Commission.
Both firms agreed to settle the charges against them.
According to an SEC announcement Tuesday, Evens Barthelemy, owner of the New York-based Barthelemy Group LLC, misled examiners by inflating the firm's claimed assets under management “tenfold in an apparent attempt to show that the firm was eligible for SEC registration.”
Another investigation by the commission found that Seth Richard Freeman, principal of Moraga, Calif.-based EM Capital Management LLC, “delayed nearly 18 months in producing books and record related to the firm's mutual fund advisory business.”
In the Barthelemy Group case, SEC examiners found that the assets associated with a list of client accounts had been altered by moving decimal points one place to the right. The strategy made the firm's total assets under management appear as $26.28 million, as opposed to the actual assets of $2.628 million.
Mr. Barthelemy did not respond to a request for comment.
According to the SEC, the firm improperly registered with the SEC from July 2009 to early 2011 “on the basis of aspirational AUM that was 10 times higher than reality.”
Mr. Barthelemy also was found to have failed to adopt reasonable compliance policies and procedures, to maintain required books and records concerning codes of ethics, and to provide the firm's disclosure brochure to clients.
Without admitting or denying the allegations, Mr. Barthelemy consented to cease-and-desist orders. He has been barred from the securities industry and from associating with an investment company, with the right to reapply after two years.
In the EM Capital case, involving the failure to furnish the required books and records upon request by SEC staff in December 2010, Mr. Freeman and EM Capital agreed to pay a $20,000 penalty.
According to the SEC, the firm did not fully comply with the requests for documentation until September 2012.
Without admitting or denying the SEC's findings, Mr. Freeman and EM Capital agreed to censures and cease-and-desist orders. Mr. Freeman said he was dealing with medical issues at the time of the SEC exam that prevented him from providing the requested information in a timely fashion.
"This truly is a purely administrative and internal issue," he said. "We weren't able to meet the deadlines because the documents needed to be reviewed prior to handing them over."
He added: "Bottom line is it is behind us now and we are moving forward."