SEC Charges Former Hedge Fund CCO for Withholding a Compliance Record from SEC Examiners

ADMINISTRATIVE PROCEEDING
File No. 3-20114

September 30, 2020 - The Securities and Exchange Commission today announced settled charges against a former chief compliance officer of a registered investment adviser and of its affiliated broker-dealer for withholding a compliance record in an SEC examination of her employer.

According to the SEC's order, in October 2016, Meredith A. Simmons of New York, New York, was directed to memorialize compliance reviews she had conducted in connection with her employer's decision to invest in the securities of a company shortly before an acquisition announcement. The order finds that Simmons did not do so at the time, and in September 2017, she created two backdated and factually inaccurate versions of a memorandum that purported to memorialize the compliance reviews. The order further finds that, in October 2017, SEC examiners requested all documents relating to these reviews, and Simmons produced the memorandum that she had backdated to a date before the acquisition announcement, and falsely represented that it was created contemporaneously with the events it described. The order further finds that Simmons withheld the other memorandum, which she had backdated to a date after the acquisition announcement, even though both documents were responsive to the examiners' requests. According to the order, Simmons's conduct delayed and impeded the SEC staff's inquiry into her employer's October 2016 investment.

The SEC's order finds that Simmons aided and abetted and was a cause of her employer's violations of Section 204(a) of the Investment Advisers Act of 1940, which provides that records of investment advisers are subject to examinations by the Commission.  Without admitting or denying the SEC's findings, Simmons consented to an order requiring her to cease and desist from committing or causing any violations of the charged provision and to pay a civil penalty of $25,000. Simmons also agreed to be censured and to a suspension from appearing and practicing before the SEC as an attorney. The suspension prohibits Simmons from representing clients in SEC matters, including investigations, litigation, or examinations, and from advising clients about SEC filing obligations or content. Simmons is permitted to apply for reinstatement after one year. The order also bars Simmons from acting in a compliance capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after three years.

The SEC's investigation was conducted by David Austin, Ann Marie Preissler, and Simona K. Suh of the Enforcement Division's Market Abuse Unit, with assistance from Neil Hendelman of the New York Regional Office and Mathew Wong of the Market Abuse Unit. The investigation was supervised Joseph G. Sansone, Chief of the Market Abuse Unit. The examination that led to the investigation was conducted by Joseph P. DiMaria, James E. Anastasia, and Belinda Rodriguez of the Office of Compliance Inspections and Examinations (OCIE) and supervised by Thomas Butler.