When the SEC comes around asking for documentation, it pays to be able to respond promptly.
The SEC has settled an enforcement action against EM Capital Management
for $20,000, alleging that the RIA failed to provide the agency with requested books and records, including documents related to a defunct mutual fund that had been a series of the Northern Lights Fund Trust
administered by Gemini Fund Services
. The news was announced today in an SEC press release
The SEC's cease-and-desist order
says that Seth Freeman
, CEO of the Moraga, California-based RIA, failed to provide the commision's examination staff with books and records related to the EM Capital India Gateway Fund
. The agency requested the documents in December 2010 and Freeman did not provide them until September 2012, according to the order.
Freeman told MFWire
that he's happy to put this matter behind him.
"During the period in question, the SEC examiners were aware that I was disabled by severe pain caused by two herniated disks, and underwent over ten surgical procedures and dozens of medical appointments," he said. "As stated in the order, neither EM Capital Management nor I deny or admit the allegations, and we are pleased to get this administrative matter behind us so we may focus on our emerging and frontier markets business."
The SEC's order says that the SEC sent Freeman a Wells notice on May 29, 2012, "indicating that the staff intended to recommend that the Commission bring enforcement action" against him and his firm.
EM Capital's India Gateway Fund terminated
in May of 2011, and EM Capital Management abandoned its registration
as a mutual fund sponsor this past October 31. The RIA currently manages $2 million, according to the SEC's order.
This is the third revelation in the last six months of an SEC settlement or enforcement action concerning a series of the Northern Lights Fund Trust.
In June, Northern Lights disclosed that it had received a Wells notice
regarding a fund that's no longer part of the trust. Neither Northern Lights nor the SEC would confirm to MFWire
the identity of the fund in question.
In September, the SEC settled
a complaint against a Portland-based advisor for $1.1 million. The cease-and-desist order
in that case alleged that the advisor, Focus Point
, failed to disclose to the to the trust's board several conflicts of interest, including payment arrangements between the fund's advisor and subadvisor.
The fund named in that settlement, the Generations Multi-Strategy Fund
, was liquidated this past November 16
. In September, a Northern Lights spokesman emailed the MFWire
a statement stating that "the board is working with the advisor to insure future compliance and the trust is always reviewing and improving the compliance program."
Additionally, in the summer of 2011, an SEC filing
by Toews Funds
revealed that an oversight by Gemini Fund Services had allowed the advisory agreement between Toews and one of its mutual funds, a series of the Northern Lights Fund trust, to expire.
A spokeswoman for Gemini did not respond to MFWire
's request for comment.
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