SEC v. Dolphin Associates III, LLC; and Donald T. Netter, No. LR-26203, District of Connecticut (Dec. 23, 2024) — Press Release
raw: Dolphin Associates III, LLC and Donald T. Netter
Dolphin Associates III, LLC and Donald T. Netter, No. LR-26203 (Dec. 23, 2024)
summary
The SEC charged Dolphin Associates III, LLC and its principal, Donald T. Netter, for violating antifraud provisions by withholding investor withdrawals, charging excessive fees, and masking conflicts of interest.
paragraph
The SEC filed charges against Dolphin Associates III, LLC and Donald T. Netter for violating the Investment Advisers Act of 1940. The defendants are accused of improperly withholding fund withdrawals since 2016, charging excessive fees, and failing to conduct required annual audits. The litigation seeks injunctive relief, disgorgement with prejudgment interest, and civil monetary penalties.
narrative
The SEC has filed charges against Connecticut-based investment adviser Dolphin Associates III, LLC, and its principal, Donald T. Netter, for violating antifraud provisions of the Investment Advisers Act of 1940. Since November 2016, the defendants allegedly improperly suspended investor withdrawals to facilitate long-term small-cap equity investments. A significant conflict of interest arose because Netter failed to disclose that he personally owned the same securities held by the Fund. Additionally, the defendants charged excessive fees and failed to provide required annual audits or financial reports. To mask these issues, they made misleading statements regarding fund liquidity and efforts to return capital to investors. The SEC is now seeking injunctive relief, disgorgement plus interest, and civil monetary penalties.
Classified investment-adviser-fraud(confidence 97%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →
Statutes
Parties
Securities and Exchange CommissionDolphin Associates III, LLCDonald T. Netter
Keywords
dolphin netternetterdolphinfunddolphin associatesdonald nettersecsecurities exchangeexchange commissionexcessive feesalleges dolphinassociatesiiillcdonald
Exhibits & Attached Documents (1)
Extracted insights
Entities 2
- person excessive fees
- agency Securities and Exchange Commission
Triples 11
- Securities And Exchange Commission filed charges against Dolphin Associates III, LLC and Donald T. Netter
- Dolphin Associates III, LLC and Donald T. Netter withheld withdrawals from a private fund (the Fund)
- Dolphin Associates III, LLC and Donald T. Netter charged the Fund with excessive fees
- Dolphin Associates III, LLC and Donald T. Netter made misleading statements to investors regarding the liquidity of the Fund's portfolio and efforts to return money
- Dolphin Associates III, LLC and Donald T. Netter failed to disclose that Netter owned the same securities and was incentivized to prevent divestment
- Dolphin Associates III, LLC and Donald T. Netter failed to obtain annual audits and distribute financial reports as required
- Securities And Exchange Commission charges Dolphin and Netter with violating antifraud provisions of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8
- Securities And Exchange Commission seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter
- Securities And Exchange Commission is being handled by Mark Audet, Ryan Murphy, and Marc Jones of the Boston Regional Office
- Securities And Exchange Commission is supervised by Colin Forbes, Andrew Dean, and Corey Schuster of the Asset Management Unit
- Securities And Exchange Commission appreciates the assistance of Eric Tso of the Division of Examinations staff
PDF (from attached: complaint)
Text layers
Extracted body text (2,228c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26203 / December 23, 2024 Securities and Exchange Commission v. Dolphin Associates III, LLC and Donald T. Netter, No. 3:24-civ-02022 (D. Conn. filed December 20, 2024) SEC Charges Connecticut Investment Adviser and its Principal for Improperly Withholding Investor Funds, Charging Excessive Fees, and Misleading Investors The Securities and Exchange Commission today filed charges against Connecticut-based Dolphin Associates III, LLC, and its principal, Donald T. Netter. The SEC’s complaint alleges that Dolphin and Netter with improperly withholding withdrawals from a private fund (the “Fund”) that they managed, charging the Fund with excessive fees, and making materially misleading statements to investors. The SEC’s complaint, filed in the United States District Court for the District of Connecticut, alleges that since November 2016, Dolphin and Netter have improperly suspended withdrawals from the Fund while causing the Fund to make long-term investments in various small-cap equities. The SEC’s complaint further alleges that Dolphin and Netter failed to disclose that Netter himself owned the same securities and was incentivized to prevent the Fund from divesting them. The complaint further alleges that, Dolphin and Netter charged the Fund excessive fees, failed to obtain annual audits and distribute financial reports as required by the Fund’s organizational documents, and made materially misleading statements to investors regarding the liquidity of the Fund’s portfolio and Dolphin and Netter’s efforts to return money to investors. The SEC’s complaint charges Dolphin and Netter with violating the antifraud provisions of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter. The SEC’s case is being handled by Mark Audet, Ryan Murphy, and Marc Jones of the Boston Regional Office, and is supervised by Colin Forbes, Andrew Dean, and Corey Schuster of the Asset Management Unit. The SEC appreciates the assistance of Eric Tso of the Division of Examinations staff.
OCR text (2,228c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26203 / December 23, 2024 Securities and Exchange Commission v. Dolphin Associates III, LLC and Donald T. Netter, No. 3:24-civ-02022 (D. Conn. filed December 20, 2024) SEC Charges Connecticut Investment Adviser and its Principal for Improperly Withholding Investor Funds, Charging Excessive Fees, and Misleading Investors The Securities and Exchange Commission today filed charges against Connecticut-based Dolphin Associates III, LLC, and its principal, Donald T. Netter. The SEC’s complaint alleges that Dolphin and Netter with improperly withholding withdrawals from a private fund (the “Fund”) that they managed, charging the Fund with excessive fees, and making materially misleading statements to investors. The SEC’s complaint, filed in the United States District Court for the District of Connecticut, alleges that since November 2016, Dolphin and Netter have improperly suspended withdrawals from the Fund while causing the Fund to make long-term investments in various small-cap equities. The SEC’s complaint further alleges that Dolphin and Netter failed to disclose that Netter himself owned the same securities and was incentivized to prevent the Fund from divesting them. The complaint further alleges that, Dolphin and Netter charged the Fund excessive fees, failed to obtain annual audits and distribute financial reports as required by the Fund’s organizational documents, and made materially misleading statements to investors regarding the liquidity of the Fund’s portfolio and Dolphin and Netter’s efforts to return money to investors. The SEC’s complaint charges Dolphin and Netter with violating the antifraud provisions of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter. The SEC’s case is being handled by Mark Audet, Ryan Murphy, and Marc Jones of the Boston Regional Office, and is supervised by Colin Forbes, Andrew Dean, and Corey Schuster of the Asset Management Unit. The SEC appreciates the assistance of Eric Tso of the Division of Examinations staff.