UNITED STATE OF AMERICA
|In the Matter of
Gold Asset Management, Inc. and
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted pursuant to Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 ("Advisers Act") against Respondents Gold Asset Management, Inc. and Marc L. Gold ("Gold").
In anticipation of the institution of these administrative proceedings, Respondents have submitted a joint Offer of Settlement ("Offer") that the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except those finding pertaining to the jurisdiction of the Commission over them and the subject matter of these proceedings, Respondents consent to the entry of the findings and the imposition of the remedial sanctions and cease-and-desist order as set forth herein.
Accordingly, IT IS ORDERED that proceedings pursuant to Section 203(e), 203(f) and 203(k) of the Advisers Act be, and hereby are, instituted.
On the basis of this Order Instituting Proceedings, and the Offer submitted by the Respondents, the Commission finds that:
A. Gold Asset Management, Inc. (File No. 801-49271), a Virginia corporation with its principal office located in Steamboat Springs, Colorado, has been registered with the Commission as an investment adviser since May 23, 1995, pursuant to Section 203(c) of the Advisers Act.
B. Marc L. Gold has been, during all relevant periods, associated with and the president and sole principal of Gold Asset Management, Inc.
C. In 1996 and 1997, Gold distributed and directed the distribution of an advertising circular to approximately five prospective clients of Gold Asset Management, Inc. This circular misrepresented the size and performance of Gold Asset Management, Inc. and misrepresented the educational and professional credentials of Marc L. Gold. Specifically, the circular indicated that Gold Asset Management Inc. had $278.6 million under management in 1996 and 522 client accounts when, it fact, the firm had only approximately $30 million under management and fewer than 100 accounts. The circular also misrepresented the firm's rates of return, indicating that Gold Asset Management, Inc. achieved an annualized rate of return for clients of 54.6 percent for the period between June 1, 1995 and May 31, 1996. In fact, the actual annualized rate of return for different client accounts during that period ranged between 15 and 30 percent. The circular further represented that Gold Asset Management, Inc. had realized for clients a 10-year annualized return of 18.2 percent, compared with a return of 14.4 percent for the S&P 500. The 18.2 percent return was fictitious inasmuch as Gold Asset Management, Inc. did not exist prior to May 1995. The advertising circular falsely reflected that Gold Asset Management, Inc. had a "[p]rofessional staff with more than 50 years experience." In fact, Gold Asset Management, Inc. had no professional staff other than Gold. Finally, the circular gave the misleading impression that Gold attended the University of South Carolina School of Law while that institution has no record of him ever having attended.
D. By virtue of the conduct described above, Gold Asset Management, Inc. committed or caused and willfully violated Sections 206(1) and 206(2) of the Advisers Act and Gold caused and willfully aided and abetted those violations. Sections 206(1) and 206(2) of the Advisers Act prohibit an investment adviser from employing any device, scheme or artifice to defraud or engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client.
E. By virtue of the conduct described above, Gold Asset Management, Inc. committed or caused and willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereof and Gold caused and willfully aided and abetted those violations. Section 206(4) of the Advisers Act prohibits an investment adviser from engaging "in any act, practice, or course of business which is fraudulent, deceptive or manipulative." Pursuant thereto, the Commission adopted Rule 206(4)-1(a)(5) which states that, "[i]t shall constitute a fraudulent, deceptive, or manipulative act, practice or course of business within the meaning of Section 206(4) of the [Advisers] Act, for any investment adviser, directly or indirectly, to publish, circulate or distribute any advertisement ... which contains any untrue statement of material fact, or which is otherwise false or misleading."
Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Respondents.
Accordingly, IT IS HEREBY ORDERED that:
A. Pursuant to Sections 203(e) and 203(f) of the Advisers Act, Gold Asset Management, Inc. and Gold be censured;
B. Pursuant to Section 203(k) of the Adviser's Act, Gold Asset Management, Inc. and Gold cease and desist from committing or causing any violations and any future violations of Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-1(a)(5);
C. Gold and Gold Asset Management, Inc., jointly and severally, shall pay a civil money penalty in the amount of $20,000 to the United States Treasury. Payment shall be made within thirty days of the date of this Order. Such payment shall be (1) made by United States postal money order, certified check, bank cashier's check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Office of the Comptroller, U.S. Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (4) submitted under a cover letter which identifies Gold Asset Management, Inc. and Gold as the Respondents in this proceeding, the file number of the proceedings, a copy of which cover letter and money order or check shall be sent to Donald M. Hoerl, Associate Regional Director, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 4800, Denver, CO 80202; and
D. Gold Asset Management, Inc. and Gold shall comply with their undertaking to retain for a period of three years from the date of this Order an independent consultant not unacceptable to the staff of the Commission to perform certain examinations relating to the operations of Gold Asset Management, Inc., including the verification of assets under management, investment returns and fees assessed, and to make annual reports concerning those examinations to the staff.
E. Gold Asset Management, Inc. and Gold shall comply with their undertakings to:
1. mail a copy of this Order, together with a cover letter in a form acceptable to the staff of the Commission, to each of their existing clients by certified mail, return receipt required, within thirty (30) days from the date of this Order;
2. from the effective date of this Order until the expiration of twelve (12) months, provide a copy of this Order to all prospective investment advisory clients not less than forty-eight (48) hours prior to entering into any written or oral investment advisory contract (or no later than the time of entering into such contract if the client has the right to terminate the contract without penalty within 5 business days after entering into the contract);
3. within thirty (30) days from the date of this Order, execute and deliver to Donald M. Hoerl at the Commission's Central Regional Office an affidavit that it has provided this Order to its existing clients in accordance with the terms of this Order; and
4. within thirteen (13) months from the date of this Order, execute and deliver to Donald M. Hoerl of the Commission's Central Regional Office an affidavit that it has provided this Order to prospective clients in accordance with the terms of this Order.
By the Commission.
Jonathan G. Katz
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