SEC Charges New York-Based Investment Adviser for Failure to Implement Compliance Policies and Procedures

ADMINISTRATIVE PROCEEDING
File No.3-22147

SEC Charges New York-Based Investment Adviser for Failure to Implement Compliance Policies and Procedures

September 20, 2024 — The Securities and Exchange Commission today announced settled charges against Jordan/Zalaznick Advisers, Inc. (“JZAI”), a New York-based registered investment adviser, for failing to implement written compliance policies and procedures reasonably designed to prevent violations of the Investment Advisers Act of 1940 (“Advisers Act”) and its rules.  To settle the SEC’s charges, JZAI agreed to pay a $150,000 penalty.

According to the SEC’s order, JZAI was registered as the filing adviser for an umbrella registration listing multiple relying advisers, some of which had foreign offices and operations.  A condition of umbrella registration is that every adviser under the “umbrella” operate under a single code of ethics and a unified compliance program administered by a single chief compliance officer.  Each relying adviser, its employees, and persons acting on its behalf are subject to the filing adviser’s supervision and control.  The order finds that from December 2018 until May 2022, JZAI failed to implement certain aspects of its compliance program.  Among other things, the order finds that JZAI failed to conduct compliance training for all of its supervised persons, spot-checks of books and records required to be maintained by JZAI, and periodic inspections of the principal places of business of its relying advisers, all of which were required by its compliance manual.  

JZAI consented to the entry of the SEC’s order finding that the company violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  In addition to the $150,000 penalty, JZAI agreed to a cease-and-desist order and censure.

The SEC’s investigation was conducted by Heather L. Shaffer and Ming Ming Yang, and supervised by Lee A. Greenwood, Andrew Dean, and Corey Schuster of the Division of Enforcement’s Asset Management Unit. The examination that led to Enforcement’s investigation was conducted by William J. Delmage, Michael J. Devaney, Erin Foley, Jacob Haviland, and Rachel Lavery of the Division of Examination in the New York Regional Office.