U.S. Securities and Exchange Commission
Litigation Release No. 18714 / May 17, 2004
SECURITIES AND EXCHANGE COMMISSION v. WARREN ASSET MANAGEMENT, LLC, DG PRIVATE INVESTMENT FUND, LLC, and WELDON R. WARREN individually and d/b/a DYNAMIC FINANCIAL MANAGEMENT Civil Action No. 3:04-CV-1038-R, U.S.D.C./Northern District of Texas (Dallas Division)
SEC FILES SETTLED ACTION AGAINST DALLAS AREA INVESTMENT ADVISER AND ITS PRINCIPAL FOR FRAUD
On May 13, 2004, the Commission filed a settled civil action in U.S. District Court for the Northern District of Texas in Dallas against Warren Asset Management, LLC ("WAM"), a Commission-registered investment adviser, its sole owner and manager, Weldon R. Warren, and Warren's private investment fund, DG Private Investment Fund, LLC ("DGPIF"). WAM, Warren and DGPIF ("the defendants") agreed to be enjoined from violating the federal securities laws' antifraud and record-keeping provisions.
In the civil action, the Commission alleges that the defendants misled clients about their investment performance record, failed to properly disclose a fee increase for DGPIF, placed the funds of their clients, some of whom are elderly and unsophisticated, in highly leveraged investments without disclosing many of the associated risks, and failed to maintain and provide to their clients a wide assortment of required records. The Commission also alleges that Warren failed to comply with the Commission's examination process, by refusing to respond to the staff's requests for information and documentation. Finally, the Commission alleges that WAM is no longer eligible to be a Commission-registered investment adviser.
Warren, WAM and DGPIF agreed to be permanently enjoined from violating the antifraud provisions of the federal securities laws, 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. WAM agreed to be permanently enjoined from violating of the antifraud provisions of the Investment Advisers Act of 1940 ("Advisers Act"), Sections 206(1), (2) and (4) of the Advisers Act and Rules 206(4)-1(a)(5), 206(4)-2, 206(4)-4(a)(1), 206(4)-4(a)(2) and 206(4)-4(c) thereunder, and the registration and books-and-records provisions of the Advisers Act, Sections 203A and 204 of the Advisers Act and Rules 204-2(a)(1)-(7), 204-2(a)(10)-(12), 204-2(a)(14), 204-2(a)(16), 204-2(b), 204-2(e)(3), 204-3 thereunder. Finally, Warren agreed to be permanently enjoined from aiding and abetting the antifraud, registration and books-and-records provisions of the Advisers Act. In addition, WAM and Warren consented, without admitting or denying the findings, to the issuance of a follow-on administrative Order revoking WAM's investment adviser registration with the Commission and barring Warren from association with any investment adviser.