The Securities and Exchange Commission today sanctioned a former portfolio manager at a Boulder, Colo.-based investment advisor for forging documents and misleading the firm’s chief compliance officer to conceal his failure to report personal trades.
An SEC investigation found that Carl Johns of Louisville, Colo., failed to pre-clear or report several hundred securities trades in his personal accounts as required under the federal securities laws and the code of ethics at Boulder Investment Advisers (BIA).
Johns hid the trades in quarterly and annual trading reports that he submitted to BIA by altering brokerage statements and other documents that he attached to those reports. He later tried to cover up his wrongdoing by creating bogus pre-trade approvals, thereby misleading the firm’s chief compliance officer in her investigation into his dishonest trading.
This is the first time that charges have been brought against an individual in connection with the SEC’s Rule 38a-1(c) of the Investment Company Act for misleading and obstructing a chief compliance officer (CCO).
Johns agreed to pay more than $350,000 and be barred from the securities industry for no less than five years.
“Securities industry professionals have an obligation to adhere to compliance policies, and they certainly must not interfere with the chief compliance officers who enforce those policies,” said Julie Lutz, Acting Co-Director of the SEC’s Denver Regional Office in a statement. “Johns set out to cover up his compliance failures by creating false documents and misleading his firm’s CCO.”