SEC Charges Investment Adviser with Providing Incomplete Information to Clients

ADMINISTRATIVE PROCEEDING
File No. 3-20211

January 29, 2021 - The Securities and Exchange Commission today announced that Daniel Investment Associates, LLC, a registered investment adviser based in Santa Barbara, California, and its principal, Gregory Daniel Van Wyk, agreed to settle charges that they misled trustees who were evaluating investments managed by Daniel Investment Associates.

According to the SEC's order, in meetings during early 2018, client trustees sought Van Wyk's advice regarding whether to redeem $1.25 million in promissory notes in Essex Capital Corporation, a lease financing company in whose securities several of Van Wyk's clients were invested. As described in the order, at the time of these meetings, Van Wyk knew that Essex was having cash flow difficulties and facing other serious financial problems but did not disclose this adverse information to the trustees. Nevertheless, the order finds, Van Wyk recommended that the trustees remain invested in the Essex promissory notes and assured them based on their prior performance that the notes were liquid investments that were very likely to continue generating 8.5% in annual returns. The order finds that Van Wyk's recommendation led the trustees to keep the trust invested in the Essex promissory notes. The order further finds that the trustees learned about Essex's operational difficulties and financial problems after the SEC filed a June 2018 complaint charging Essex and its founder with defrauding noteholder investors.

The SEC's order finds that Daniel Investments Associates and Van Wyk violated Section 206(2) of the Investment Advisers Act of 1940. Without admitting or denying the SEC's findings, Daniel Investment Associates and Van Wyk agreed to cease-and-desist from future violations of this provision, to be censured, to engage an independent compliance consultant, and to provide notice of the SEC's order to clients. In addition, Daniel Investment Associates is ordered to pay disgorgement and prejudgment interest, and Van Wyk is ordered to pay a civil penalty of $75,000.

The SEC's investigation was conducted by Yolanda Ochoa and Marc Blau of the Los Angeles Regional Office. The SEC's examination that led to the investigation was conducted by Chris Jung and Kent Woo and supervised by J. Cindy Eson.