New Form ADV, Disclosure Rules Already Raising Concerns For Advisors

Wednesday, May 11, 2011 07:08
edit
New Form ADV, Disclosure Rules Already Raising Concerns For Advisors

The SEC recently cracked down on one case of an advisor faking his Form ADV in such a way that not even the new "plain language" system would have caught. Are the new disclosure rules working?

This Website Is For Financial Professionals Only


 

Rick Cho of Jupiter Group Capital Advisors was charged last week for inflating his AUM on his Form ADV to claim $153 million under management when he didn't have any clients at all.

 

That's pretty baldfaced doctoring of the documents. While it happened before the new rules kicked in this year, it's unlikely that plain language would have filled the gap between zero and $153 million. 

 

Ironically there are hints that Cho boosted his numbers in order to seek SEC registration.

 

Between this and a lot of grousing about the new requirement to include disciplinary records in prospecting kits, it sounds like the new disclosures may not be rolling out as cheerily as the regulators intended.

 

Naturally, advisors with nothing to hide in their plain English ADV, it's no problem. But if someone can just fake the numbers, what's stopping those with a blotchy record from erasing that part "in plain English?"

 

 

 

 

 

 

 

http://www.sec.gov/litigation/litreleases/2011/lr21961.htm

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy