The U.S. Securities and Exchange Commission (SEC) said Monday that it has filed charges against Connecticut-based Dolphin Associates III and its principal, Donald T. Netter, accusing them of withholding investor funds, charging excessive fees, and misleading investors.
SEC Charges Investment Adviser Dolphin Associates and Donald Netter for Misleading Investors
The U.S. Securities and Exchange Commission (SEC) said Monday that it has filed charges against Connecticut-based Dolphin Associates III and its principal, Donald T. Netter, accusing them of withholding investor funds, charging excessive fees, and misleading investors.
The SEC alleges that since November 2016, Dolphin and Netter improperly suspended withdrawals from a private fund they managed, using the funds for long-term investments in small-cap equities.
They add that Netter allegedly failed to disclose his personal ownership of the same securities, creating a conflict of interest, which incentivised the retention of the investments.
The SEC also accuses Dolphin and Netter of charging excessive fees, failing to obtain required annual audits, and distribute financial reports as required by the Fund’s organisational documents.
They “made materially misleading statements to investors regarding the liquidity of the Fund’s portfolio and Dolphin and Netter’s efforts to return money to investors,” said the SEC.
The SEC’s complaint, filed in the U.S. District Court for the District of Connecticut, cites violations of multiple antifraud provisions under the Investment Advisers Act of 1940.
The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter.
