SEC Charges Firm With Inflating AUM on Form ADV

SEC headquarters in Washington (Photographer: Zach Gibson/Bloomberg)

The Securities and Exchange Commission has charged Vista Financial Advisors LLC and the firm’s co-owner and chief compliance officer, Ruben Cedrick Williams, with inflating the firm’s assets under management on Form ADV.

Why it matters: Firms cannot misrepresent their AUM to the SEC or to the public.

The case: According to the complaint, filed in the U.S. District Court for the Southern District of New York, Vista and Williams made material misrepresentations in Vista’s Forms ADV for 2022 and 2023. The firm falsely claimed in its 2022 Form ADV filing that Vista had $10 billion in regulatory assets under management, or RAUM.

While Vista represented in its Form ADV filed on April 14, 2022, that it had $10 billion in RAUM, “it subsequently failed to provide the Commission with evidence to corroborate this statement,” the order states.

Vista has also “ignored repeated requests from the Commission staff to substantiate, correct, and/or withdraw the statement,” the order says, adding that “to the extent that Vista had any RAUM, such assets did not remotely approach the $10 billion in RAUM represented in the Form ADV.”

Rather than undertaking any corrective measures in response to the Commission’s inquiries, on April 5, 2023, Vista filed an updated Form ADV representing that Vista’s RAUM had grown to nearly $11.5 trillion, “compound[ing] the misrepresentation,” according to the complaint.

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