Securities Law Prof Blog

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

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Thursday, February 16, 2012

SEC Says Adviser Stole from Clients to Pay SEC Settlement

If the SEC's allegations against Robert Pinkas are true, the investment adviser has a lot of chutzpah. According to its order instituting an administrative proceeding (In Re Pinkas, IA Rel. 3371),

Pinkas misappropriated $173,000 from a fund client to pay the costs of defending himself in an unrelated Commission investigation. Pinkas subsequently made material misrepresentations to the fund’s investors about the misappropriation, telling them that multiple law firms had reviewed the fund’s indemnification provisions and concluded that his use of fund assets to cover his attorney’s fees in the other matter was appropriate. Pinkas then misappropriated $632,000 from the same client to cover the disgorgement he agreed to pay as part of a settlement in the other matter with the Commission. After misappropriating these funds, Pinkas violated an investment adviser bar imposed in the other matter by continuing to associate with an investment adviser.

Pinkas agreed to a settlement in a previous SEC enforcement action, SEC v. Brantley Capital Management, which ordered him to pay a $325,000 civil penalty and $632,729 in disgorgement and interest, and barred him from associating with any investment adviser with a right to reapply after one year.

http://lawprofessors.typepad.com/securities/2012/02/sec-says-adviser-stole-from-clients-to-pay-sec-settlement.html

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