A Toledo-area investment advisory firm has been fined $175,000 and ordered to make some internal changes by the Securities and Exchange Commission for failing to remedy ongoing compliance problems.
Modern Portfolio Management Inc. of Holland on Wednesday was cited by the SEC’s Enforcement Division’s Asset Management unit for violations under the federal agency’s “compliance rule” that governs investment advisers.
The company said it had no comment on the SEC action against it.
The compliance rule requires investment advisers to adopt and implement written policies and procedures designed to prevent securities-law violations. The policies and procedures must be reviewed annually, and firms must designate a compliance officer to oversee them.
The SEC began a Compliance Program Initiative two years ago during which it identified compliance problems at several firms and ordered them to correct potential violations.
“The Compliance Program Initiative is designed to address repeated compliance failures that may lead to bigger problems,” Andrew J. Ceresney, co-director of the SEC’s enforcement division, said in a statement.
The SEC said its examiners warned Modern Portfolio Management, which was formed in 1995, about compliance violations.
During a follow-up examination, none of the identified deficiencies had been fixed, said Andrew Bowden, director of the SEC’s National Exam Program.
The SEC said that the company’s owners, G. Thomas Damasco II and Bryan Ohm, “failed to complete annual compliance reviews in 2006 and 2009 and made misleading statements” on the firm’s Web site.
Specifically, Modern Portfolio Management misled potential investors by stating on its Web site that the firm oversaw more than $600 million in assets, the SEC said. “However, on its Form ADV filing to the SEC during that same time period, it reported that the firm’s assets under management were $359 million or less,” the federal agency added.
As part of its penalties, the SEC said Modern Portfolio Management agreed to the $175,000 fine and that Mr. Damasco and Mr. Ohm would be censured.
Also, Mr. Damasco and Mr. Ohm will be required to complete 30 hours of compliance training, and the company has agreed to designate someone other than Mr. Damasco or Mr. Ohm to be the firm’s chief compliance officer.
Modern Portfolio Management also is required to retain a compliance consultant for three years, the SEC said.
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