SEC Sanctions Two Investment Advisers for Impeding Examinations
summary
Evens Barthelemy and his firm Barthelemy Group LLC inflated AUM tenfold by manipulating client data to falsely qualify for SEC registration and failed to maintain compliance records, resulting in a two-year industry bar and censure, while Seth Richard Freeman and EM Capital delayed producing books and records for 18 months, paying a $20,000 penalty and accepting a cease-and-desist order.
paragraph
The SEC sanctioned Evens Barthelemy and Barthelemy Group LLC for inflating assets under management from $2.628 million to $26.28 million by manually shifting decimal points in client account data to falsely meet SEC registration thresholds, and for failing to adopt compliance policies or maintain required records. Barthelemy agreed to a two-year industry bar, a cease-and-desist order, firm censure, and mandatory disclosures to clients and regulators. Separately, Seth Richard Freeman and EM Capital were penalized $20,000 and issued cease-and-desist orders and censures for delaying nearly 18 months in providing books and records related to mutual fund advisory activities, only complying after enforcement action became imminent.
narrative
The SEC sanctioned Evens Barthelemy and his firm Barthelemy Group LLC for intentionally inflating assets under management (AUM) from $2.628 million to $26.28 million by manually altering client account data on a spreadsheet, shifting decimal points to the right to falsely qualify for SEC registration between July 2009 and early 2011. Barthelemy, as chief compliance officer, also failed to adopt reasonable compliance policies or maintain required records on codes of ethics and disclosure brochures. As part of the settlement, Barthelemy agreed to a two-year industry bar with the right to reapply, a cease-and-desist order, firm censure, and mandatory public disclosures to clients, state regulators, and on the firm’s website. Separately, Seth Richard Freeman and his firm EM Capital were penalized for delaying nearly 18 months—until September 2012—in producing books and records requested by SEC staff in December 2010, including financial statements, emails, and mutual fund management documents, only complying after learning enforcement action was imminent. Freeman and EM Capital agreed to pay a $20,000 penalty, accept a cease-and-desist order, and be censured without admitting or denying the allegations. The SEC emphasized that both cases involved obstruction of critical examinations, underscoring its commitment to enforcing cooperation and transparency from registered advisers. Investigations were led by the SEC’s Asset Management Unit and regional offices in New York and San Francisco.
Classified obstruction(confidence 100%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Parties
barthelemy groupbarthelemy group llcbarthelemy group with sec from july 2009 to early 2011em capitalevens barthelemyevens barthelemy and barthelemy group llcfreeman and em capitalrequired books and records upon sec request in december 2010san francisco areasec examiners by inflating aum ten-foldSecurities and Exchange Commissionseth richard freemanseth richard freeman and em capital
Keywords
secbarthelemyfirminvestmentbarthelemy groupfreemancapitalinvestment advisersimpeding examinationsbooks recordsasset managementmanagement unitbarthelemy firminvestment companyexaminations
Extracted insights
Dollar amounts 3
- $26.28M $26.28 million $10M–$100M
- $2.63M $2.628 million $1M–$10M
- $20K $20,000 $10K–$100K
Entities 14
- company barthelemy group
- company barthelemy group llc
- agency barthelemy group with sec from july 2009 to early 2011
- company em capital
- person evens barthelemy
- company evens barthelemy and barthelemy group llc
- company freeman and em capital
- location New York
- agency required books and records upon sec request in december 2010
- person san francisco area
- agency sec examiners by inflating aum ten-fold
- agency Securities and Exchange Commission
- person seth richard freeman
- company seth richard freeman and em capital
Triples 15
- SEC sanctioned Evens Barthelemy and Barthelemy Group LLC
- SEC sanctioned Seth Richard Freeman and EM Capital
- Evens Barthelemy misled SEC examiners by inflating AUM ten-fold
- Barthelemy Group LLC misrepresented AUM as $26.28 million instead of $2.628 million
- Seth Richard Freeman delayed producing books and records for nearly 18 months
- EM Capital delayed producing books and records for nearly 18 months
- Evens Barthelemy registered Barthelemy Group with SEC from July 2009 to early 2011
- Barthelemy Group LLC failed to adopt reasonable compliance policies and procedures
- Evens Barthelemy agreed to be barred from securities industry with right to reapply after two years
- Seth Richard Freeman failed to furnish required books and records upon SEC request in December 2010
- EM Capital failed to furnish required books and records upon SEC request in December 2010
- Freeman and EM Capital agreed to pay $20,000 penalty
- EM Capital complied with records request in September 2012
- Barthelemy Group is based in New York
- EM Capital is based in San Francisco area
Extracted body text (4,141c)
The Securities and Exchange Commission today sanctioned two investment advisory firms for impeding examinations conducted by SEC staff. An SEC investigation found that Evens Barthelemy and his New York-based firm Barthelemy Group LLC misled SEC examiners by inflating the firm’s claimed assets under management (AUM) ten-fold in an apparent attempt to show that the firm was eligible for SEC registration. Another SEC investigation found that Seth Richard Freeman and his San Francisco-area firm EM Capital delayed nearly 18 months in producing books and records related to the firm’s mutual fund advisory business. Both firms agreed to settle the SEC’s charges against them. “Barthelemy was not truthful and Freeman was not responsive during their respective interactions with SEC examiners,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit. “We will continue to pursue enforcement actions against firms that obstruct or delay the SEC’s critical work in overseeing investment advisers.” Carlo di Florio, Director of the SEC’s Office of Compliance Inspections and Examinations, added, “Examinations of SEC-registered firms play a vital role in protecting markets and investors, and we expect their candor and prompt cooperation as SEC staff works to promote compliance, monitor risk, and prevent fraud.” According to the SEC’s order against Barthelemy and his firm, when examiners asked for a list of client assets, Barthelemy misrepresented his firm’s AUM as $26.28 million instead of the actual $2.628 million. He downloaded client account balances from the firm’s online custodial platform onto a spreadsheet, and then manually moved the decimal points for each client one place to the right before providing it to the SEC staff. From July 2009 to early 2011, Barthelemy improperly registered Barthelemy Group with the SEC on the basis of the aspirational AUM that was 10 times higher than reality. Barthelemy Group, through Barthelemy’s actions as chief compliance officer, also failed to adopt reasonable compliance policies and procedures or to maintain required books and records concerning codes of ethics and providing the firm’s disclosure brochure to clients. Barthelemy agreed to be barred from the securities industry and from associating with an investment company, with the right to reapply after two years. Without admitting or denying the allegations, Barthelemy and his firm consented to cease-and-desist orders, and the firm was censured. Barthelemy and his firm also will provide a copy of the proceeding to their clients and appropriate state securities regulators, will post a copy on the firm’s website, and will disclose the proceeding in an amended SEC Form ADV filing. According to the SEC’s order issued today against Freeman and his firm, they failed to immediately furnish the required books and records upon request by SEC staff in December 2010. EM Capital and Freeman repeatedly promised to provide the records including financial statements, e-mails, and documents related to their management of a mutual fund. However, they did not fully comply until September 2012, months after learning that SEC staff was considering enforcement action against them. Freeman and EM Capital agreed to pay a combined $20,000 penalty. Without admitting or denying the SEC’s findings, Freeman and EM Capital also agreed to censures and cease-and-desist orders. The SEC’s investigation of Barthelemy Group was conducted by David Neuman and Scott Weisman of the SEC’s Asset Management Unit. The examination of Barthelemy Group was conducted by Dawn Blankenship, Kristine Geissler, Arjuman Sultana, Margaret Pottanat, and Anthony Fiduccia of the New York Regional Office’s investment adviser/investment company examination program. The SEC’s investigation of EM Capital was conducted by Sahil W. Desai and Erin E. Schneider of the San Francisco Regional Office, who are members of the SEC’s Asset Management Unit. The examination of EM Capital was conducted by Tom Dutton, Ada Chee, and Ed Haddad of the San Francisco Regional Office’s investment adviser/investment company examination program.
OCR text (4,141c · plain-text · 99% conf)
The Securities and Exchange Commission today sanctioned two investment advisory firms for impeding examinations conducted by SEC staff. An SEC investigation found that Evens Barthelemy and his New York-based firm Barthelemy Group LLC misled SEC examiners by inflating the firm’s claimed assets under management (AUM) ten-fold in an apparent attempt to show that the firm was eligible for SEC registration. Another SEC investigation found that Seth Richard Freeman and his San Francisco-area firm EM Capital delayed nearly 18 months in producing books and records related to the firm’s mutual fund advisory business. Both firms agreed to settle the SEC’s charges against them. “Barthelemy was not truthful and Freeman was not responsive during their respective interactions with SEC examiners,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit. “We will continue to pursue enforcement actions against firms that obstruct or delay the SEC’s critical work in overseeing investment advisers.” Carlo di Florio, Director of the SEC’s Office of Compliance Inspections and Examinations, added, “Examinations of SEC-registered firms play a vital role in protecting markets and investors, and we expect their candor and prompt cooperation as SEC staff works to promote compliance, monitor risk, and prevent fraud.” According to the SEC’s order against Barthelemy and his firm, when examiners asked for a list of client assets, Barthelemy misrepresented his firm’s AUM as $26.28 million instead of the actual $2.628 million. He downloaded client account balances from the firm’s online custodial platform onto a spreadsheet, and then manually moved the decimal points for each client one place to the right before providing it to the SEC staff. From July 2009 to early 2011, Barthelemy improperly registered Barthelemy Group with the SEC on the basis of the aspirational AUM that was 10 times higher than reality. Barthelemy Group, through Barthelemy’s actions as chief compliance officer, also failed to adopt reasonable compliance policies and procedures or to maintain required books and records concerning codes of ethics and providing the firm’s disclosure brochure to clients. Barthelemy agreed to be barred from the securities industry and from associating with an investment company, with the right to reapply after two years. Without admitting or denying the allegations, Barthelemy and his firm consented to cease-and-desist orders, and the firm was censured. Barthelemy and his firm also will provide a copy of the proceeding to their clients and appropriate state securities regulators, will post a copy on the firm’s website, and will disclose the proceeding in an amended SEC Form ADV filing. According to the SEC’s order issued today against Freeman and his firm, they failed to immediately furnish the required books and records upon request by SEC staff in December 2010. EM Capital and Freeman repeatedly promised to provide the records including financial statements, e-mails, and documents related to their management of a mutual fund. However, they did not fully comply until September 2012, months after learning that SEC staff was considering enforcement action against them. Freeman and EM Capital agreed to pay a combined $20,000 penalty. Without admitting or denying the SEC’s findings, Freeman and EM Capital also agreed to censures and cease-and-desist orders. The SEC’s investigation of Barthelemy Group was conducted by David Neuman and Scott Weisman of the SEC’s Asset Management Unit. The examination of Barthelemy Group was conducted by Dawn Blankenship, Kristine Geissler, Arjuman Sultana, Margaret Pottanat, and Anthony Fiduccia of the New York Regional Office’s investment adviser/investment company examination program. The SEC’s investigation of EM Capital was conducted by Sahil W. Desai and Erin E. Schneider of the San Francisco Regional Office, who are members of the SEC’s Asset Management Unit. The examination of EM Capital was conducted by Tom Dutton, Ada Chee, and Ed Haddad of the San Francisco Regional Office’s investment adviser/investment company examination program.