SEC Charges Michigan-Based Investment Adviser for Causing False and Misleading Information To Be Included in a Commission Filing

ADMINISTRATIVE PROCEEDING
File No. 3-22470

April 7, 2025 - The Securities and Exchange Commission today announced settled charges against Southfield, Michigan-based registered investment adviser Advance Capital Management, Inc. for causing its former client, previously-registered investment company Advance Capital I, Inc. ("ACI"), to include materially false and misleading information in ACI's application to deregister as a registered investment company filed with the Commission. The filing failed to disclose the existence of ACI's pending claims in certain class actions, which Advance Capital Management collected after ACI disbanded.

The SEC's order finds that Advance Capital Management provided materially false and misleading answers on ACI's Form N-8F application to deregister as an investment company. According to the order, ACI's Board of Directors voted to close ACI and liquidate its holdings in July 2016. The order further finds that during the liquidation process, Advance Capital Management failed to consider whether class action claims that remained pending could be monetized for the benefit of ACI's shareholders. As set forth in the order, Advance Capital Management received distributions from proceeds from ACI's class action claims after the company had been shut down and its holdings had been liquidated. Nevertheless, according to the order, Advance Capital Management failed to provide ACI with information regarding the pending class action claims in the Forms N-8F that ACI filed with the Commission in March and April 2017, and the Commission subsequently granted ACI's application to deregister on the basis of incorrect information. The order finds that Advance Capital Management continued to receive payments from ACI's class action claims after ACI's Forms N-8F were filed with the Commission.

The SEC's order finds that Advance Capital Management caused ACI to violate Section 34(b) of the Investment Company Act of 1940. Without admitting or denying the findings, Advance Capital Management consented to a cease-and-desist order, and agreed to pay disgorgement of $300,000, prejudgment interest of $99,953, and a civil penalty of $200,000.

The SEC's investigation was conducted by Bradley Lewis and supervised by Jeffrey Shank and Corey Schuster, all of the Enforcement Division's Asset Management Unit.