Company Improperly Registers with the SEC as an Adviser

July 19, 2016

The SEC brought an enforcement action against Saving2Retire, LLC for improperly registering with the SEC as an investment adviser.  An adviser must be eligible to register with the SEC and, if not, it must register with a state if its activities require such registration.

In 2011, Saving2Retire registered with the SEC, claiming that it was eligible for registration under Rule 203A-2(e) under the Advisers Act.  That rule exempts certain investment advisers from the prohibition on SEC registration if the adviser provides investment advice to all of its clients exclusively through an interactive website. Rule 203A-2(e) also provides that an adviser claiming this exemption may provide investment advice through other means to than 15 clients during the preceding 12 months.

The SEC found that Saving2Retire did not and does not qualify for registration under Rule 203A-2(e) because Saving2Retire had no internet clients and thus, did not advise any clients or provide investment advice to clients exclusively through an interactive website. Further, during at least one period, Saving2Retire provided investment advice, through means other than its interactive website, to 15 or more clients during the preceding 12 months.

The SEC also noted that during an examination, Saving2Retire refused to produce client account documents, financial records of Saving2Retire, and other documents an adviser is required to keep pursuant to the Advisers Act. Saving2Retire also failed to make and keep records it is required to keep under the Advisers Act.

Click https://www.sec.gov/litigation/admin/2016/ia-4457.pdf for the enforcement action.