ADMINISTRATIVE PROCEEDING
File No. 3-21047

September 8, 2022 - The Securities and Exchange Commission today announced that NPA Asset Management, LLC ("NPA"), a registered investment adviser based in New Jersey, has agreed to settle charges concerning NPA's failure to monitor client accounts, improper principal trading activity, and related compliance failures.

According to the SEC's order, from at least April 2017 through December 2019, NPA maintained fee-based advisory accounts without monitoring for account suitability. The order finds that NPA's failure to monitor client accounts was not only contrary to representations NPA made in its Form ADV Brochures that the firm would monitor accounts for, among other things, suitability and inactivity, but was also a breach of the firm's duty of care.

The order further finds that, in October 2019, following NPA's receipt of a deficiency letter from the SEC's Division of Examinations, the firm adopted a suitability policy that, among other things, included an obligation to monitor for inactive accounts, which NPA defined as accounts with five or fewer transactions over an 18-month period. Applying that metric to the period April 2017 through December 2019 demonstrated that hundreds of accounts would have been deemed inactive as defined by NPA's new suitability policy. The order also finds that NPA failed to implement this policy in a manner reasonably designed to prevent violations of the Advisers Act and the rules thereunder. For example, NPA failed to consider whether certain advisory clients would be better off in brokerage accounts, as required by the policy.

Separately, according to the SEC's order, from April 2017 through December 2021, NPA engaged in approximately 378 principal trades without providing clients with advance written disclosure or obtaining client consent for the trades, as required by the Advisers Act. Section 203 of the Advisers Act prohibits an investment adviser, while acting as a principal for its own account, from knowingly selling any security to or purchasing any security from any client without providing advance written notice of the adviser's principal capacity and obtaining the client's consent thereto. The order also finds that NPA failed to adopt and implement policies and procedures concerning principal trades and the accuracy of its client disclosures.

The SEC's order finds that NPA willfully violated Section 206(2), Section 206(3), and Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. Without admitting or denying the SEC's findings, NPA consented to a cease-and-desist order, a censure, disgorgement of $367,874.12 plus prejudgment interest, and a $300,000 civil penalty. A Fair Fund has been established, and NPA has agreed to administer the distribution to harmed investors. NPA will also engage an independent compliance consultant to review the firm's policies and procedures regarding account suitability and monitoring, principal trading, and client disclosures.

The SEC's investigation was conducted out of the New York Regional Office by Alison Conn, Samuel Kalar, Roseann Daniello, and Judith Weinstock, who were supervised by Sheldon Pollock. The examination that led to the investigation was conducted by Michael Paolo, Anthony Pennella, Rachel Lavery, and George DeAngelis of the Division of Examinations.