SEC Charges Investment Adviser and Principal with Disclosure and Compliance Failures

ADMINISTRATIVE PROCEEDING
File No. 3-20664

November 24, 2021 - The Securities and Exchange Commission today announced settled charges against Upright Financial Corp., a registered investment adviser based in New Jersey, and David Yow Shang Chiueh, Upright’s founder and president, for managing a mutual fund contrary to internal policies and public disclosures and for repeatedly miscalculating the fund’s net asset value.

According to the SEC’s order, beginning in our about July 2017 and continuing through June 2020, Upright and Chiueh concentrated over 25% of the client fund’s assets in one industry and operated it as a non-diversified fund, contrary to fundamental investment policies and statements in public filings. In August 2018, the order finds, in an attempt to change the fund’s fundamental investment policies, Upright and Chiueh conducted a proxy vote of shareholders that did not comply with the SEC’s proxy rules for registered investment companies. The order further finds that, on various dates between July 2017 and June 2020, Upright and Chiueh inaccurately calculated the client fund’s net asset value, in some instances overstating or understating the value by over 15%.

The SEC’s order finds that Upright and Chiueh willfully violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Sections 20(a) and 34(b) of the Investment Company Act of 1940 and Rule 20a-1(a) thereunder, and Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. In addition, the order finds that Upright willfully violated Advisers Act Rule 206(4)-7, and Chiueh caused Upright’s violation of that provision and of Advisers Act Section 206(4). The order further finds that Upright and Chiueh caused the client fund’s violations of Sections 13(a)(1) and 13(a)(3) of the Investment Company Act and Rules 22c-1and 38a-1 thereunder. Without admitting or denying the SEC’s findings, Upright and Chiueh consented to a cease-and-desist order, a censure, and certain undertakings including the retention of an independent compliance consultant. In addition, Upright agreed to pay disgorgement of $390,705 and prejudgment interest of $36,505, and Upright and Chiueh agreed to pay, jointly and severally, a civil penalty of $90,000.

The SEC’s investigation was conducted by Stephen B. Holden and supervised by Andrew Dean, both of the Asset Management Unit in the New York Regional Office, with the assistance of Douglas Smith of the New York Regional Office and Mark Krosky of the Division of Examinations’ Office of Risk & Strategy, Quantitative Analytics Unit. The examination that led to the investigation was conducted by Eric Baltuch, Michael O’Donnell, Lisa Blackburn, and Raymond Slezak of the Division of Examinations in the New York Regional Office.