SEC Bars Recidivist Tampa Broker
FOR IMMEDIATE RELEASE
Washington, DC, November 16, 2001 The Securities and Exchange Commission today announced that it had barred a former broker and investment adviser, with a history of violating the securities laws, from association with any broker, dealer, or investment adviser, and prohibited him from, among other things, employment with a registered investment company. On November 6, 2001, the United States Attorney's Office for the Middle District of Florida unsealed an indictment against the same individual, charging him with seven counts of wire fraud and 13 counts of mail fraud. The indictment arises from the same conduct that was the basis for the SEC's actions.
The SEC's administrative Order against Tampa, Florida-based Steven H. Adler, arises from allegations that between October 1994 and September 1998, Adler fraudulently misappropriated $1,995,600 from 11 investors in a purported "market-timing" program. The SEC found that Adler fraudulently promised the investors that he would use their money to buy and sell shares of ASM Fund ("ASM"), which was at that time a Tampa-based mutual fund of which Adler was President and Chairman of the Board.
Adler told investors that he would maintain "market timing" accounts through the registered investment adviser of which Adler was also President, and that he would maximize investor returns by correlating the purchase and sale transactions to fluctuations in the market. In contrast to Adler's representations to investors, the SEC found that he stole their money to pay for the expenses of his investment advisory company and for his own expenses. The SEC also found that Adler prepared, and furnished to the investors, fictitious monthly statements purportedly reflecting gains in their "market-timing" accounts.
"As this case illustrates, the SEC's enforcement program will quickly act to stamp out recidivism," said David Nelson, Director of the Commission's Southeast Regional Office. "Our mission is clear: we can, and will, impose significant sanctions on those who take advantage of investors, and will seek criminal prosecutions, especially for those who are two- or three-time offenders."
Adler previously consented to a 1996 SEC order that required him to cease-and-desist from violating Section 17(a)(3) of the Investment Company Act of 1940. That section restricts borrowing from registered investment companies. The SEC's 1996 order found that Adler's investment advisory company had illegally borrowed money from ASM and that Adler had aided and abetted and caused his advisory company's violation.
The Commission instituted its more recent proceedings against Adler on July 18, 2000. Adler settled the proceedings on November 15, 2001, without admitting or denying the SEC's findings, and consented to the SEC's Order requiring him to cease and desist from committing or causing violations of 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 204, 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2(a)(8), 204-2(a)(10) and 206(4)-2, thereunder.
In addition, the November 15, 2001 Order bars Adler from associating with any broker, dealer or investment adviser, and from affiliating, in certain specified capacities, with any investment company. The Order also directs Adler to disgorge $1,995,600, plus prejudgment interest, but waives payment of the disgorgement amount and interest based upon Adler's demonstrated inability to pay.
The Commission thanks the U.S. Attorney's office and the FBI for their partnership in pursuing this case.
Additional Materials: Administrative Proceedings