Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, September 29, 2011

SEC Charges Investment Adviser with Lying about "Soft Dollars"

The SEC charged Kurt Hovan, a San Francisco-area investment adviser, with fraud for lying to clients about how brokerage commission rebates were being used and producing phony documents to cover up the fraud during an SEC examination.  The SEC alleges that Hovan misappropriated more than $178,000 in “soft dollars” that he falsely claimed to be using to pay for legitimate investment research on his clients’ behalf. In reality, Hovan was secretly funneling the money for such undisclosed uses as office rent, computer hardware, and his brother’s salary. When SEC examination staff asked Hovan to provide documentation to back up his claims, he created phony research reports.

The SEC also charged his wife Lisa Hovan and his brother Edward Hovan for their roles in the fraudulent scheme at Hovan Capital Management (HCM).

http://lawprofessors.typepad.com/securities/2011/09/sec-charges-investment-adviser-with-lying-about-soft-dollars.html

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