According to an SEC press release, former portfolio manager Carl Johns was sanctioned for forging documents and misleading his former firm’s chief compliance officer about his personal trades.
Mr. Johns was sanctioned for failing to report or pre-clear hundreds of his personal security trades, the press release stated, and he concealed the trades by altering documents. Mr. Johns was employed at Boulder Investment Advisers.
BIA, according to the SEC press release, had in place a code of ethics that restricted trading in securities held by the firm as well as restrictions on when and how their employees could trade. Furthermore, all trades had to be pre-cleared by the firm’s chief compliance officer. From 2006 to 2010, Mr. Johns circumvented these restrictions and the code of ethics by submitting inaccurate quarterly and annual reports and falsely certified his annual compliance with the code of ethics. The press release maintains that Mr. Johns not only hid his trades but also physically altered brokerage statements, trade confirmations, and pre-clearance approvals before submitting them to the firm along with his quarterly reports.
This case is the first for the SEC to charge under Rule 38a-1(c) of the Investment Company Act for misleading and obstructing a chief compliance officer (CCO). Mr. Johns will pay disgorgement of $231,169, prejudgment interest of $23,889, and a penalty of $100,000. Also, without admitting or denying the findings, Mr. Johns agreed to a five-year bar from the securities industry.
If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.