Investment advisers who think they can outsmart the Securities and Exchange Commission had better think again. Its not hip.
The SEC has revoked the registration of Thrasher Capital Management in New York for not providing the company’s books and records to the SEC in May 2009 and ignoring repeated requests to do so. The firm’s chief executive James Perkins has been suspended from working with any investment adviser for nine months as of November 19 when the decision was made.
Perkins, who registered with the SEC in March 2007, also made false statements of “material” facts in his Form ADV. That’s the document used by investment advisers to register with the SEC. The firm's website identifies the company as the investment adviser for the GendeX fund which caters to the Generation X and Y crowds who don't feel they are well-served by the established Wall Street community.
According to the SEC, Thrasher misstated in Form ADV filed in July 2007 that more than 40 percent of the firm’s clients were high net work individuals. The firm also incorrectly represented its ownership structure by not identifying an individual who held a significant ownership stake.
Thrasher was charged with violating Sections 204(a) and 207 of the Investment Advisers Act of 1940 which require investment advisers to provide the SEC with their books and records upon request and not to make any false statements of material facts.
Perkins did not pay any monetary penalties because he submitted financial statements that he couldn’t’ fork up the money. Perkins and Thrasher also did not admit or deny the SEC’s findings.
“The settlement of this enforcement action by Thrasher is now a material proceeding that must be disclosed to all current and potential clients,” says Jay Gould, a partner with the law firm of Pillsbury Winthrop Shaw Pittman in a blog on legal issues affecting investment advisers. “Investment advisers should make every effort to avoid a similar fate and can do so with an effective compliance program that is appropriate to the business of each adviser.”
A woman responding to a call to the press coordinator of Thasher Capital said the "company is no longer in business." A telephone operator in Manhattan also could not find a listing for James Perkins at 305 Spring Street which the SEC's ruling says is the address for Perkins and Thrasher.