SEC Charges Investment Adviser with Custody Rule and Compliance Violations
Sept. 19, 2022
File No. 3-21110
September 19, 2022 - The Securities and Exchange Commission today announced settled charges against New York-based registered investment adviser Arcadia Wealth Management, Inc. for violating Commission rules designed to safeguard advisory client assets.
Registered investment advisers that have custody of client assets are subject to the "custody rule," which requires them to obtain an annual surprise examination by an independent public accountant to verify the existence of such assets that is conducted pursuant to a written agreement setting forth specified requirements. The SEC's order finds that Arcadia failed to obtain surprise examinations in accordance with the custody rule for client assets over which it had custody from at least 2013 through 2019. The order also finds that Arcadia failed to adopt and implement written policies and procedures reasonably designed to prevent custody rule violations.
The SEC's order finds that Arcadia violated Section 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-2 and 206(4)-7 thereunder. Without admitting or denying the order's findings, Arcadia consented to a cease-and-desist order and a censure, and agreed to pay a civil money penalty of $90,000. Arcadia also agreed to an undertaking to have its Chief Compliance Officer complete 30 hours of compliance training.
The SEC's investigation was conducted by Jonathan Grant, Amy Mayer, and Wendy B. Tepperman of the New York Regional Office, and was supervised by Sheldon L. Pollock.