U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23334 / September 4, 2015
Accounting and Auditing Enforcement Release No. AAER-3688 / September 4, 2015
Securities and Exchange Commission v. Summit Asset Strategies Investment Management, LLC et al., Civil Action No. 2:15-cv-01429 (W.D. Wa.)
SEC Charges Seattle-Area Hedge Fund Adviser with Taking Unearned Management Fees
Two Accountants Charged With Performing Deficient Audit of Fund
The Securities and Exchange Commission today charged a Bellevue, Wash.-based investment advisory firm and its CEO with fraudulently inflating the values of investments in the portfolio of a private fund they advised so they could attain unearned management fees. The SEC also charged the fund's outside auditors with performing a deficient audit that enabled the firm to send misleading financial statements to investors.
Chris Yoo and his firm Summit Asset Strategies Investment Management agreed to pay more than $1 million to settle the fraud charges arising from Summit Stable Value Fund. Yoo and another of his advisory firms, Summit Asset Strategies Wealth Management agreed to pay over $180,000 to settle fraud charges related to his failure to inform clients that Summit Asset Strategies Wealth Management received significant fees when referring them to invest in the fund.
According to the SEC's complaint filed in U.S. District Court for the Western District of Washington:
Without admitting or denying the allegations, Yoo and Summit Asset Strategies Investment Management agreed to the entry of an order (1) enjoining them from violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rule 206(4)-8(a) thereunder, with Yoo also agreeing to an injunction regarding violations of Section 207 of the Advisers Act; and (2) imposing disgorgement of $889,301 plus prejudgment interest of $104,632 and a penalty of $150,000, all on a joint and several basis. Without admitting or denying the allegations, Summit Asset Strategies Wealth Management agreed to the entry of an order (1) enjoining it from violations of Sections 206(1), 206(2), and 207 of the Advisers Act; and (2) imposing disgorgement of $81,729.14 plus prejudgment interest of $6,611.75 and a penalty of $100,000. Yoo also agreed to be barred from the securities industry.
According to the SEC's order instituting a settled administrative proceeding against the Summit Stable Value Fund's external auditors Raymon Holmdahl and Kanako Matsumoto:
Holmdahl and Matsumoto agreed to settle the charges without admitting or denying the findings by agreeing to be suspended for three years from practicing as an accountant on behalf of any publicly-traded company or other entity regulated by the SEC.