UNITED STATES OF AMERICA
In the Matter of
ALEXIS A. ARLETT,
|ORDER INSTITUTING PUBLIC PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Alexis A. Arlett ("Arlett").
In anticipation of the institution of these proceedings, Arlett has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the entry of the injunction set forth below in Section II, paragraph B., which is admitted, Arlett, by her Offer, consents to the entry of this Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions ("Order").
Accordingly, IT IS ORDERED that proceedings, pursuant to Section 203(f) of the Advisers Act, against Arlett be, and hereby are, instituted.
On the basis of this Order and the Offer submitted by Arlett, the Commission finds that:
A. Alexis A. Arlett, age 42, resides in Skillman, New Jersey. From April 1995 through January 2001, she was the president, sole owner and operator of Arlett and Associates, Inc., an investment adviser registered with the state of New Jersey. Arlett operated Arlett and Associates from her home. From 1993 to April 1995, Arlett was associated as a registered representative with a broker-dealer registered with the Commission.
B. On February 8, 2001, an Order of Permanent Injunction was entered against Arlett by the United States District Court for the District of New Jersey, in Securities and Exchange Commission v. Alexis A. Arlett, et al., Civil Action No. 01-621 (AET), pursuant to her consent. The Order of Permanent Injunction permanently enjoined Arlett from violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Advisers Act.
C. The Commission's Complaint alleged that, between September 1995 and November 2000, Arlett, through Arlett and Associates, misappropriated approximately $4.1 million in client funds from accounts maintained at a broker-dealer, falsely claiming that these funds represented fees owed by clients. Arlett's clients had signed agreements allowing her to obtain the funds directly from the broker-dealer upon presentation of a request for fees. Arlett and her company took approximately $2.5 million of this total from the accounts of one family. During this period, the total value of assets under management by Arlett and Arlett and Associates never exceeded $6.04 million.
D. The Complaint further alleged that, in order to perpetrate and conceal the fraud, Arlett created and distributed false account statements to clients, and made misrepresentations and omissions of material fact in correspondence, e-mails and oral statements to investors. Arlett transferred the stolen funds to several bank accounts and used these funds for lavish personal living expenses, including more than $1.3 million spent on jewelry, and hundreds of thousands of dollars on artwork.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Arlett and to impose the sanctions specified therein.
Accordingly, IT IS HEREBY ORDERED that Arlett be, and hereby is, barred from association with any investment adviser.
By the Commission.
Jonathan G. Katz
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