SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Securities Exchange Act of 1934
Investment Advisers Act of 1940
Investment Company Act of 1940
Admin. Proceeding File No. 3-10142
In the Matter of Waltzer and Associates, Lewis N. Waltzer, and Karney E. Waltzer
The SEC today instituted public administrative proceedings against Waltzer and Associates ("Waltzer"), a registered investment adviser located in upstate New York, and Lewis N. Waltzer and Karney E. Waltzer, for a variety of fraudulent conduct.
Waltzer, which was located in Monticello, New York from 1985 until 1994 and in Newburgh, New York thereafter, managed approximately $38.8 million in assets for over three hundred clients during the relevant period.
The order instituting proceedings alleges that, from at least January 1994 through August 1996, Waltzer, acting through Lewis and Karney Waltzer, engaged in the following fraudulent conduct:
First, Waltzer defrauded existing and prospective clients by making false performance claims. Specifically, Lewis and Karney Waltzer told prospective and existing clients they would almost certainly earn at least a twelve percent annual return. Lewis and Karney Waltzer falsely told clients that they were earning at least one percent returns per month and were on track to earn at least twelve percent per year. In fact, for much of the relevant period, Waltzer's clients generally earned less than one percent per month or twelve percent per year.
The Respondents further defrauded clients by concealing and lying about the fact that they received transaction-based fees and commissions on investments they recommended to clients, and failing to disclose a prior SEC disciplinary action against Waltzer and Lewis Waltzer for fraudulent performance claims. Finally, Respondents failed to provide prospective clients with a written disclosure statement as required by the Investment Advisers Act of 1940 ("Advisers Act") and entered into unlawful performance fee arrangements.
The Order alleges that Waltzer and Lewis and Karney Waltzer willfully violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The order further alleges that Waltzer willfully violated, and Lewis and Karney Waltzer willfully aided and abetted and caused violations of, Sections 204, 205, 206(1), 206(2), and 206(4) of the Advisers Act and Rules 204-3 and 206(4)-4 thereunder.
A hearing will be held before an Administrative Law Judge to determine whether the allegations against Waltzer and Lewis and Karney Waltzer are true, and, if so, what remedial action, if any, is appropriate.