SEC Charges Advisory Firm Bruderman Asset Management and its Principal for Failing to Disclose Misuse of Investment Funds
FOR IMMEDIATE RELEASE
Washington D.C., Sept. 26, 2023 —
The Securities and Exchange Commission today announced that New York-based Bruderman Asset Management LLC (BAM) and its principal, Matthew J. Bruderman, agreed to settle charges related to their failure to disclose the misuse of proceeds raised from investment advisory clients and to the firm’s failure to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest.
According to the SEC’s order, from at least February 2017 through August 2021, BAM and Bruderman advised at least 13 clients to invest at least $6.1 million in three companies in which Bruderman had decision-making authority and significant ownership interests. The SEC’s order finds that BAM and Bruderman failed to disclose to the clients that their investments would be temporarily used for other purposes, such as to fund BAM’s payroll and to repay loans owed to Bruderman or to the other companies with which he was affiliated. According to the SEC’s order, BAM, through Bruderman, also failed to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest.
“Full disclosure of conflicts of interest is a central safeguard for investors who place their trust in investment advisers,” said Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office. “Our program remains focused on ensuring that investment advisers make full and complete disclosures in order to increase investor confidence.”
Without admitting or denying the SEC’s findings, BAM and Bruderman each consented to an order requiring them to cease and desist from committing or causing violations of various provisions of the Investment Advisers Act of 1940, imposing a censure, and ordering them to pay, jointly and severally, a civil penalty of $250,000.
The SEC's investigation was conducted by Megan R. Genet, Bari R. Nadworny, Elizabeth Baier, George O’Kane and Steven G. Rawlings under the supervision of Mr. Pollock. The SEC examinations that led to the investigation were conducted by Lori Rutkowski, Adam Bacharach, Michael E. Kress Jr. CFA, David Jaffe, Lourdes Caballes, and Michael Rufino.