Securities and Exchange Commission

SEC Obtains Permanent Injunction Against Owner and Manager of Registered Investment Adviser After Successful Trial and Appeal

Litigation Release No. 25601 / December 22, 2022

Securities and Exchange Commission v. The Nutmeg Group LLC, Randall Goulding, and David Goulding, Civil Action No. 1:09-cv-01775 (N.D. Ill. filed March 23, 2009)

On December 20, 2022 an Illinois federal court enjoined Randall Goulding, owner and managing member of The Nutmeg Group LLC (Nutmeg), a registered investment adviser, from engaging in a number of investment-related activities. Specifically, the court enjoined Randall Goulding from buying, selling or trading securities on behalf of an investment adviser or pooled investment vehicle; managing securities investments for, or providing investment advice to, any person or entity, other than himself and immediate relatives, for compensation; and providing consulting, valuation, compliance or other investment-related services to an investment adviser or pooled investment vehicle.

The SEC previously charged Randall Goulding for fraud for misappropriating client assets and misrepresenting the value of the fifteen investment pools (the "Funds") he and Nutmeg advised. Following a two week trial in 2018, Magistrate Judge Jeffrey T. Gilbert of the United States District Court for the Northern District of Illinois issued findings of fact and conclusions of law that Randall Goulding had commingled investor funds with his personal assets, implemented flawed internal systems and methods for valuing and reporting assets under management, and transferred millions of dollars out of the investment pools to himself and companies controlled by family members. The Court also found that Randall Goulding "used Nutmeg as his personal piggybank" and concluded that Randall Goulding knowingly violated, and permanently enjoined Randall Goulding from future violations of, Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Randall Goulding was ordered to pay over $1.8 million in disgorgement, prejudgment interest, and civil penalties.

The permanent injunction was imposed following a July 7, 2022 decision by the United States Court of Appeals for the Seventh Circuit, which upheld all finding of fact and conclusions of law by the district court, but ordered a new injunction specifying the prohibited conduct.

The SEC previously permanently denied Randall Goulding the privilege of appearing or practicing before the Commission as an attorney pursuant to Rule 102(e) of the Commission's Rules of Practice.

The litigation was handled by Andrew Shoenthal, Robert M. Moye, and Benjamin J. Hanauer of the Chicago Regional Office with assistance of Sheila Meaders and Sara L. Renardo. The investigation that led to the SEC's action was conducted by Mr. Shoenthal and Ann Tushaus of the Chicago Regional Office and was supervised by Paul A. Montoya.