SEC charges unregistered adviser with failing to disclose conflicts

Barred by Finra, Donald Hunter set up a private fund that bought shares he had owned personally

The Securities and Exchange Commission has charged Donald H. Hunter, an unregistered investment adviser based in Ridgefield, Conn., with failing to disclose material conflicts of interest related to the sale of shares of his private fund, You Angel Finance.

According to the complaint, Hunter established You Angel Finance as a private, unregistered fund after he was barred by the Financial Industry Regulatory Authority Inc. in 2012 for the fraudulent sale of promissory notes to his broker-dealer clients.

From late 2016 through 2018, while acting as investment adviser to You Angel Finance, the SEC alleged that Hunter raised approximately $430,000 from investors, claiming that You Angel Finance was supplying seed capital to or purchasing shares from a private drug research company. The SEC charged that Hunter had acquired the company’s shares personally or through companies he controlled, but as a result of the Finra bar was unable to sell them directly or indirectly to brokerage customers, as he had in the past.

The complaint alleges that Hunter failed to disclose adequately that the fund purchased the shares from Hunter or entities he controlled, or that he set the prices at which he sold those shares to the fund.

The SEC is seeks disgorgement of ill-gotten gains, prejudgment interest, financial penalties and permanent injunctions against Hunter.

[More: Study shows softening of Finra enforcement last year]