In the Matter of Sweetwater Investments, Inc., et al.
Admin. Proc. File No. 3-19123
On March 28, 2019, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Sweetwater Investments, Inc. (“Sweetwater”), a registered investment adviser, and Dennis Gibb (“Gibb” and together with Sweetwater, the “Respondents”), Sweetwater’s founder and sole owner. In the Order, the Commission found that, from July 2007 to September 2018, Gibb stole more than $3 million from Sweetwater Income Flood LP (“Income Flood”), a private fund managed by Sweetwater. The Commission found that, among other misrepresentations, Gibb inflated account values and Income Flood holdings in account statements and tax documents sent to investors, and in Forms ADV filed with the Commission. The Commission ordered the Respondents to pay, jointly and severally, disgorgement of $1,144,000 and prejudgment interest of $20,747.40 to the Commission, but offset Gibb’s obligation by the amount of any criminal order of restitution entered against him. The Commission established a Disgorgement Fund so that collected disgorgement and prejudgment interest could be distributed to harmed investors in accordance with a distribution plan to be approved by the Commission (the “Disgorgement Fund”). In the Order, Gibb voluntarily undertook to liquidate the securities in Income Flood’s brokerage account and cause Income Flood to gift all assets in the liquidated account to the Disgorgement Fund, pursuant to Section 308(b) of the Sarbanes-Oxley Act of 2002. Gibbs has completed this undertaking, sending approximately $1.77 million to the Disgorgement Fund. The Respondents have not paid any of the ordered disgorgement or prejudgment interest. See the Commission’s Order: Release No. 33-10623.
The Disgorgement Fund consists of the $1.77 million resulting from Gibb’s voluntary undertaking. The Commission does not expect any additional funds; however, any future funds collected pursuant to the Order will be added to the Disgorgement Fund for distribution to harmed investors.
On August 8, 2019, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-86601 and the Proposed Plan.
The Proposed Plan provides for the transfer of the Disgorgement Fund, less any fees and expenses, to the Court Registry Investment System account established in the related criminal action, US v. Gibb, 19-cr-059 (RSM) (W.D. Wash.) (the “Criminal Action”), for distribution to harmed investors in accordance with the restitution process in the Criminal Action.
On September 12, 2019, the Commission issued an order approving the Plan of Distribution (the “Plan”) and simultaneously posted the approved Plan. See the Commission’s Order: Release No. 34-86957 and the Plan.
For more information, please contact the Commission:
Office of Distributions