SEC orders Wyoming-based Cannell Capital, LLC Cease and Desist for Violating Advisers ActWednesday, February 26, 2020
The Securities and Exchange Commission (SEC) recently instituted cease-and-desist proceedings against Cannell Capital, LLC (CCL), an investment advisory firm with its principal place of business in Alta, Wyoming that provides investment advisory services to high net worth individuals and pooled investment vehicles.
According to the Administrative Proceeding released by the SEC on February 4, 2020, CCL failed to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information. Specifically, the company allegedly did not maintain a list of securities that members, officers and employees (“Covered Persons”) and their families that were prohibited from trading after the firm acquired potential material nonpublic information. According to the proceeding, CCL’s policy to protect against misuse of material nonpublic information prohibited Covered Persons and their family members from engaging in or helping others engage in “insider trading.”
The SEC also asserts that CCL did not have procedures designed to prevent the misuse of this information because the company did not address business-specific risks and lacked guidance regarding when trading securities should be restricted.
According to the SEC, CCL violated Section 204A of the Advisers Act. Anticipating the Administrative Proceedings, CCL submitted an Offer of Settlement, which the SEC has accepted. The SEC has ordered CCL cease and desist from committing or causing any violations and future violations of the Advisers Act. The SEC also censured CCL and ordered the company to pay $150,000 as a civil monetary penalty to the SEC.
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