Yes, the SEC really is reading Form ADV disclosures now and comparing them to reality. One firm is currently facing a cease-and-desist order after allegedly inflating its AUM by several orders of magnitude.
Calhoun Asset Management got into the hedge fund business back in 2006, claiming that its advisory assets had surged from a healthy $27 million in 1999 to over $200 million.
Unfortunately, the SEC can't find any record of the Illinois firm ever running more than $3 million during that time period.
Likewise, by 2009 Calhoun claimed that its AUM was up around $80 million. It was maybe in the $7 million range.
As the SEC complaint points out, Calhoun principal Krista Ward "herself completed and electronically signed" the ADV forms throughout this period for an affiliated firm, Skore Financial Management -- and the figures look equally inflated.
The regulators have other problems with this firm, but one thing is clear: they're putting their money where their mouth is and are finally fact-checking disclosures.
For those of us who thought they were doing it all along, it's a little bittersweet. But late is better than never.