SEC Charges Business Development Company with Custody Failures

ADMINISTRATIVE PROCEEDING
File No. 3-22158

September 23, 2024 - The Securities and Exchange Commission today announced settled charges against New York-based SuRo Capital Corp., a business development company, for failing to comply with the requirements to properly custody certain assets it held. According to the order, SuRo failed to properly custody uncertificated securities that it held and to implement its written policies and procedures relating to the custody of its assets.

The SEC's order finds that, beginning in at least July 2019, through June 2022, SuRo failed to ensure that the uncertificated securities that it held were maintained with a qualified custodian bank, as it had elected to do in its policies and procedures, or otherwise maintained in accordance with the custody requirements of Section 17(f) of the Investment Company Act and the rules thereunder. According to the order, SuRo held its uncertificated securities during that period with brokers, transfer agents, and in self-custody without complying with Section 17(f) of the Investment Company Act and the rules thereunder.

The SEC's order finds that SuRo violated the custody and policies and procedures provisions of Section 17(f) of the Investment Company Act and Rule 38a-1 thereunder. The order also finds that SuRo had previously implemented various remedial measures. Without admitting or denying the SEC's findings, SuRo consented to the entry of an order requiring it to cease and desist from further violations of those provisions of the Investment Company Act.

The SEC's investigation was conducted by Ariana Torchin and supervised by Jeremy Pendrey, Corey Schuster, and Andrew Dean, all of the Enforcement Division's Asset Management Unit, with assistance from Neil Lombardo, Jennifer Paul, and Steve Flantsbaum of the SEC's Division of Investment Management. The SEC examination that led to the investigation was conducted by Nadia Brannon and Marc Valle of the San Francisco Regional Office and Katherine Feld of the New York Regional Office.