U.S. Securities and Exchange Commission
Litigation Release No. 21961 / May 10, 2011
Securities and Exchange Commission v. Jupiter Group Capital Advisors, LLC, and Rick Cho, United States District Court for the District of Hawaii, Case No. CV11-00291 LEK (RLP) (DHI) (May 3, 2011).
SEC CHARGES INVESTMENT FIRM AND ITS PRESIDENT WITH FALSE STATEMENTS
Firm and President Refused to Comply with SEC Requests to Examine Records
The Securities and Exchange Commission today announced it has obtained a court order against an investment firm purportedly located in Kirkland, Wash., and its president, who lives in Honolulu, for making false statements in a report to the SEC and refusing to allow the Commission’s staff to review the firm’s books and records.
U.S. District Court Judge Leslie E. Kobayashi issued a temporary restraining order on May 9 requiring the firm to produce the firm’s books and records for examination and providing additional equitable relief.
The SEC alleges that Jupiter Group Capital Advisors LLC and Rick Cho falsely reported that the advisory firm managed $153 million in 38 investor accounts. The false statements were made on Jupiter Group’s Form ADV filing – the public form used by investment advisers to register with the SEC or state securities authorities. When SEC staff sought to conduct an examination of Jupiter Group after the filing was made, Cho initially failed to respond and then later claimed that the filing referred to estimated future assets and stated that Jupiter Group has no client accounts.
According to the SEC’s complaint, Cho refused to provide any evidence for his claim that the assets identified on Jupiter Group’s March 2010 Form ADV filing with the SEC belong to an unrelated business venture. He also failed to explain why the document originally filed in October 2009 was amended to show an increased number of clients and assets under management, when in reality there weren’t any client accounts. The SEC alleges that Jupiter Group did not manage $25 million or more of client assets for any reporting period, and therefore was not eligible for SEC registration. In addition, from December 2010 to the present, Jupiter Group and Cho have refused to submit to an examination.
The SEC alleges that Jupiter Group violated Sections 203A, 204, and 207 of the Investment Advisers Act, and that Cho violated Section 207 of the Advisers Act and aided and abetted Jupiter Group’s violations of Sections 203A and 204 of the Advisers Act. The parties stipulated to the terms of the May 9 temporary restraining order prohibiting Jupiter Group from making false statements in Commission filings, and orders requiring Jupiter Group to submit to an examination of its books and records, requiring withdrawal of Jupiter Group’s Form ADV, prohibiting Jupiter Group and Cho from destroying documents, requiring accountings, and granting expedited discovery. The Commission also requested a preliminary injunction, permanent injunction, and civil penalties. The court set a hearing regarding the preliminary injunction for May 31, 2011 at 9:45 a.m.