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SEC Charges 38 Entities Over Deceptive Exempt Reporting Adviser Filings

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SEC Charges 38 Entities Over Deceptive Exempt Reporting Adviser Filings

The US Securities and Exchange Commission has initiated legal proceedings against 38 entities accused of submitting fraudulent Form ADV filings between 2025 and 2026 to misrepresent themselves as legitimate investment advisers to retail investors.

Details of Alleged Form ADV Misrepresentations

In complaints filed in the United States District Court for the District of Colorado, the regulator alleged that 38 entities made material misrepresentations in Form ADV submissions to establish false credibility with U.S. investors.

According to the SEC, several defendants accessed the filing system from IP addresses in foreign jurisdictions and later failed to comply with requests from SEC counsel to produce supporting documentation.

The complaints detail that the entities provided false business addresses in Colorado where no physical presence existed, along with phone numbers that were either disconnected or assigned to unrelated businesses.

The SEC noted that filings across multiple purported exempt reporting advisers displayed identical or nearly identical numerical information and ownership structures.

Furthermore, the filings asserted that financial statements for private funds managed by the entities were audited by independent accounting firms that could not be located in federal or state accountancy registries. Certain entities also used marketing websites featuring fake registration certificates.

Statutory Violations and Enforcement Measures

The court filings charge the entities with violating Sections 204(a) and 207 of the Investment Advisers Act of 1940.

The SEC is pursuing permanent injunctions against further violations, conduct-based injunctions that prohibit the defendants from submitting Form ADV filings as exempt reporting advisers, and civil financial penalties.

Laura D'Allaird, Chief of the SEC Enforcement Division's Cyber and Emerging Technologies Unit, noted that the cases involve large-scale abuse of adviser filings by actors, many likely based overseas, attempting to capitalise on interest in emerging technologies.

The SEC confirmed that the ERA filings for all 38 named entities have been removed from its website, and acknowledged assistance from the Federal Bureau of Investigation through Operation Level Up.

Regulatory Guidance for Retail Investors

Following the enforcement actions, the SEC Office of Investor Education and Assistance issued a warning alerting the public to scammers using exempt reporting adviser filings to fabricate legitimacy.

The advisory counsels investors to remain cautious regarding any purported exempt reporting adviser that solicits retail clients directly or claims full registration with the SEC.

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What laws are the 38 entities accused of violating?

The SEC charges allege violations of Sections 204(a) and 207 of the Investment Advisers Act of 1940.

What specific false information was found in the Form ADV filings?

The filings contained non-existent Colorado business addresses, disconnected or unrelated phone numbers, identical ownership structures, and references to unlisted audit firms.

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