Two South Florida Investment Advisers to Repay Millions of Dollars for Failing to Disclose Conflicts of Interest
Sept. 25, 2019
File No. 3- 19511
September 25, 2019 - The Securities and Exchange Commission today instituted settled cease-and-desist proceedings against Miami-based Leonardo Cornide and Jorge Falcon for using investor funds to obtain personal loans and for failing to disclose their personal interest in transactions in which they used additional investor funds.
The SEC's order finds that Cornide and Falcon acted as investment advisers to Premier Assurance Group, SPC, Ltd ("PSPC"), a Cayman Islands registered insurance company. Cornide and Falcon, who own PSPC's Miami-based holding company, advised PSPC to invest up to 25% of its investment reserves in a note with Silverback Capital Partners, LLC (Silverback), which is also owned and controlled by Cornide and Falcon and which made personal loans to Cornide and Falcon of over $7 million from funds borrowed from PSPC.
Additionally, the order finds that because Cornide and Falcon own PSPC's holding company and Silverback and advised PSPC, Cornide and Falcon had a conflict of interest in recommending PSCP invest in the note with Silverback. As investment advisers, Cornide and Falcon failed to comply with their fiduciary duty to their client, PSPC, including a duty to disclose all material conflicts.
The SEC's order finds that Cornide and Falcon violated Section 206(2) of the Investment Advisers Act of 1940. Without admitting or denying the SEC's findings, Cornide and Falcon consented to a cease-and-desist order and agreed to pay collective disgorgement and interest of over $7 million and a civil penalty of $100,000 each. Cornide and Falcon also agreed to retain an independent compliance consultant to review relevant policies and procedures designed to prevent conflicts of interest at their new jointly-owned investment advisory firm which now advises PSPC.
The SEC's investigation was conducted by Sean M. O'Neill, Mark Dee, and Amie E. Berlin of the Miami Regional Office and was supervised by Jason R. Berkowitz and Glenn S. Gordon.