In the Matter of Mark R. Graham, et al.
Admin. Proc. File No. 3-18724
On September 6, 2018, the Commission instituted and simultaneously settled public administrative and cease-and-desist proceedings (the “Order”) against Blue Capital Management, Inc. (“BCM”), and Blue Alternative Asset Management, L.L.C. (together with BCM, the “Blue Advisers”), and their 100% owner and president Mark Graham (“Graham”) (collectively, the “Respondents”). In the Order, the Commission found, that from at least September 2015 through at least December 2017, the Blue Advisers and Graham engaged in a complex scheme to conceal declining asset values in various client accounts. This scheme included, among other things, making false statements and improperly redeeming investments from private funds the Respondents controlled. The Respondents’ active concealment contributed to large losses by one trust client, bringing the insurance company beneficiary of the trust to the brink of collapse. Additionally, BCM and Graham failed to disclose numerous conflicts of interest associated with their management of client assets, and failed to implement reasonably designed compliance policies and procedures. The Commission ordered the Respondents to pay a total of $2,527,547 in disgorgement, prejudgment interest, and civil money penalties (the “Monetary Relief”) to the Commission. The Commission created a Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the civil penalty could be included with disgorgement and prejudgment interest in any distribution to investors harmed by the Respondents’ conduct described in the Order. See the Commission’s Order: Release No. IA-5000.
The Commission simultaneously issued an order directing the Commission staff to distribute the Monetary Relief, less a reserve for taxes and related administrative expenses, to the Great Western Reinsurance Trust. See the Commission’s Order: Release No. 34-84043.
On October 17, 2018, the Commission issued an order appointing Miller Kaplan Arase LLP as Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-8444.
For more information, please contact the Commission:
Office of Distributions