SEC Charges Investment Adviser for Improperly Registering with the Commission and Violating Several Rules
April 5, 2018
File No. 3-18423
April 5, 2018 – The Securities and Exchange Commission today announced charges against a Danbury, Connecticut-based investment adviser for improperly registering with the Commission and violating several Commission rules that apply to registered investment advisers. The adviser, Dean A. Heinemann, who is the principal, sole owner, and sole employee of Clayborne Group, LLC, has agreed to settle the charges, and will be suspended from the securities industry for 12 months and pay $20,000.
According to the SEC’s order, Heinemann falsely claimed that Clayborne had more than $100 million in assets under management from 2012 through 2016 in order to satisfy the requisite minimum amounts to make the firm eligible for SEC registration. In addition, Heinemann caused Clayborne to violate the “custody rule” by exercising custody over client assets without providing quarterly statements to clients and without arranging for an annual surprise verification of those assets by an independent public accountant. The custody rule requires firms to follow certain procedures when they control or have access to client money or securities. Heinemann also failed to make, keep, and make available to the Commission’s staff certain required books and records.
The SEC’s order finds that Clayborne and Heinemann violated Sections 203A, 204, 206(4) and 207 of the Investment Advisers Act of 1940, and Rules 204-2 and 206(4)-2 thereunder. Without admitting or denying the SEC’s findings, Clayborne and Heinemann agreed to the entry of a case-and-desist order, and Heinemann agreed to pay a civil penalty of $20,000. Heinemann also agreed to be suspended from the securities industry for 12 months.
The SEC’s investigation was conducted by David H. London, Trevor Donelan, and Amy Gwiazda of the SEC’s Boston Regional Office, with assistance from Philmore Beazer, Daniel B. Wong, Jacob Stewart, and Ashley Hersutamto of the Office of Compliance, Inspections and Examinations in the Boston office.