In the Matter of Fieldstone Financial Management Group, LLC, et al. Admin. Proc. File No. 3-19227
Oct. 6, 2022
On July 1, 2019, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Fieldstone Financial Management Group, LLC (“Fieldstone”) and Kristofor R. Behn (“Behn”) (collectively, the “Respondents”). In the Order, the Commission found that, from 2014 to early 2016, the Respondents violated federal securities laws by failing to disclose material conflicts of interest to their advisory clients. Behn and Fieldstone also solicited an advisory client to invest $1 million in Fieldstone without disclosing that Behn planned to use much of the money to cover his personal expenses. The Commission ordered the Respondents to pay, jointly and severally, a total of $1,322,971 in disgorgement, prejudgment interest, and civil penalties, pursuant to a payment plan detailed therein. In the Order, the Commission created a fair fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the civil penalty, along with the disgorgement and prejudgment interest, can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 33-10655.
In accordance with the payment plan in the Order, the Respondents have paid a total of $700,000 into the Fair Fund, and the remaining funds are due within 360 days of the Order.
On October 3, 2019, the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund.
On December 23, 2019, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The Proposed Plan proposes Noel Gittens, a Commission employee, serve as the Fund Administrator to oversee the administration and distribution of the Fair Fund. The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-87854 and the Proposed Plan.
The Proposed Plan provides that the distribution of the Fair Fund to Eligible Investors who suffered harm as calculated by the methodology used in the plan of allocation in the Proposed Plan. Since the total Harm Amount incurred by the Eligible Investors exceeds the amount currently in the Net Available Fair Fund and pursuant to the payment schedule in the Order, receipt of additional funds is anticipated, the Fund Administrator has determined to first, make a pro-rata distribution from the available funds, and then after receipt of any additional funds, conduct a second distribution to provide a total distribution amount up to each Eligible Investor’s Harm Amount, plus reasonable interest.
On February 20, 2020, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-88249 and the Plan.
On May 28, 2020, the Commission issued an order directing the disbursement of $684,047 from the Fair Fund to Eligible Investors in accordance with the Plan. See the Commission’s Order: Release No. 34-88964.
For more information, please contact the Commission:
Office of Distributions