Barred California adviser to pay $181,000 over investment fund conflicts

Mitchell Friedman failed to disclose how he profited from funding arrangements

Sep 5, 2019 @ 4:25 pm

By InvestmentNews

The Securities and Exchange Commission has barred adviser Mitchell Friedman of Mill Valley, Calif., and required him to pay disgorgement, interest and civil penalties of about $181,000 over conflicts and disclosure failures in connection with investment funds he ran.

[More: Dually registered advisers found to have conflicts and higher fees]

According to an SEC cease and desist order, Mr. Mitchell failed to disclose to Sharpe 4 Partners, a private fund he advised, of material conflicts of interest arising from his arrangement with a separate private foreclosure fund to receive fees based on the assets invested in the fund by Sharpe 4 Partners. Mr. Friedman also misled two investors who unknowingly purchased Mr. Friedman's own investment in the foreclosure fund, the SEC said.

From February 2013 to February 2014, Mr. Friedman received payments totaling $54,565 as a result of his arrangement with the fund, which added approximately 10% to the annual management fee that he earned from Sharpe 4 Capital.

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As part of his settlement, Mr. Friedman agreed to pay disgorgement of $69,312 and prejudgment interest of $17,023 to the SEC, plus a civil penalty of $94,713.

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