The Securities and Exchange Commission announced a settlement in the case of a registered investment adviser and two of its former officers charged with breaching their fiduciary duties.
The SEC said in a news release that the matter involved RIA Momentum Advisors LLC, its former managing partner Allan J. Boomer, and its former chief operating officer and partner Tiffany L. Hawkins.
The commission found that they misused fund and portfolio company assets over a period spanning from at least August 2021 through February 2024.
The SEC’s orders disclosed that Hawkins misappropriated approximately $223,000 from portfolio companies of a private fund she managed with Boomer and that was advised by Momentum Advisors. She was found to have misused portfolio company debit cards in over 100 transactions to pay for vacations, clothing, and other personal expenses, and caused herself to be paid compensation beyond her authorized salary.
According to the orders, Hawkins concealed her misconduct from Momentum Advisors, the portfolio companies’ bookkeeper, and SEC staff. Despite red flags regarding her actions, it was determined that Boomer failed to reasonably supervise Hawkins.
Furthermore, the SEC said, Boomer caused the fund to pay a business debt that should have been paid by an entity he and Hawkins controlled, resulting in an unearned benefit to the entity of $346,904. Momentum Advisors failed to adopt and implement adequate policies and procedures and to have the fund audited as required.
“As the orders find, Hawkins and Boomer breached their fiduciary duties and misused fund and portfolio company assets for their own benefit, all to the detriment of their clients,” said Thomas P. Smith, Jr., Associate Regional Director in the New York Regional Office.
Hawkins and Boomer were found to have violated the antifraud provisions of the Investment Advisers Act of 1940, while Momentum Advisors violated the compliance and custody rule provisions of the Advisers Act.
The firm and the two individuals did not admit or deny the SEC’s findings but consented to the entry of cease-and-desist orders. Hawkins agreed to pay a $200,000 civil penalty and to be subject to an associational bar; Boomer agreed to pay an $80,000 civil penalty and to be subject to a 12-month supervisory suspension; and Momentum Advisors agreed to a censure and to pay a $235,000 civil penalty.
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