Dolphin Associates III, LLC and Donald T. Netter

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26203 / December 23, 2024

Securities and Exchange Commission v. Dolphin Associates III, LLC and Donald T. Netter, No. 3:24-civ-02022 (D. Conn. filed December 20, 2024)

SEC Charges Connecticut Investment Adviser and its Principal for Improperly Withholding Investor Funds, Charging Excessive Fees, and Misleading Investors

The Securities and Exchange Commission today filed charges against Connecticut-based Dolphin Associates III, LLC, and its principal, Donald T. Netter.  The SEC’s complaint alleges that Dolphin and Netter with improperly withholding withdrawals from a private fund (the “Fund”) that they managed, charging the Fund with excessive fees, and making materially misleading statements to investors.

The SEC’s complaint, filed in the United States District Court for the District of Connecticut, alleges that since November 2016, Dolphin and Netter have improperly suspended withdrawals from the Fund while causing the Fund to make long-term investments in various small-cap equities. The SEC’s complaint further alleges that Dolphin and Netter failed to disclose that Netter himself owned the same securities and was incentivized to prevent the Fund from divesting them.  The complaint further alleges that, Dolphin and Netter charged the Fund excessive fees, failed to obtain annual audits and distribute financial reports as required by the Fund’s organizational documents, and made materially misleading statements to investors regarding the liquidity of the Fund’s portfolio and Dolphin and Netter’s efforts to return money to investors.

The SEC’s complaint charges Dolphin and Netter with violating the antifraud provisions of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter.

The SEC’s case is being handled by Mark Audet, Ryan Murphy, and Marc Jones of the Boston Regional Office, and is supervised by Colin Forbes, Andrew Dean, and Corey Schuster of the Asset Management Unit.  The SEC appreciates the assistance of Eric Tso of the Division of Examinations staff.