In an administrative cease-and-desist order, former CCO Suzanne Ballek consented to FINRA’s findings without admitting any wrongdoing in connection with the regulator’s claims that she modified corporate records pertaining to an SEC examination.
Charges revolved around claims that she altered the approximately 170 forms she handed over to the SEC as part of its examination of her former firm.
She has agreed to pay $40,000 and face a three-year industry bar to resolve these claims.
The investment adviser that Ballek worked at during the time of her alleged misdeeds is not identified by name in the filings, but the SEC’s Investment Adviser Public Disclosure database indicates she worked with Inland Investment Advisors LLC from 2009 to 2023; the registration status of the business is listed as currently terminated.
As of its final filings with the SEC, Inland had managed assets worth roughly $249m across 31 client accounts consisting “nearly entirely of [its] affiliates, employees, and family,” the SEC said.
Altering pre-clearance trading materials
From September 2022 to September 2023, the SEC claimed, staff from the SEC’s Division of Examinations examined Ballek’s employer, requesting certain documents and information related to the company’s pre-clearance trading policy for relevant firm employees.
As a registered investment adviser, the firm was required to compel those certain employees to periodically report their personal securities transactions and holdings.
To help employees do so, Ballek created a “securities transaction request form” to document the request and approval of employee securities transactions for them to fill out and sign, and Ballek would indicate her approval by signing it as well, the SEC said.
As part of an SEC examination, from September 2022 to September 2023, SEC exam staff requested documents and information related to that pre-clearance trading policy, the SEC said.
Ballek collected and produced these documents to the staff, which included pre-clearance trading forms related to a particular portfolio manager. Before providing these forms, however, Ballek modified the dates and/or filled in missing information on many of the forms, the SEC alleged.
“For any form where the portfolio manager’s or her signature did not match the trade date, which was true for the vast majority of the forms from 2019 to 2021, Ballek changed the original date by writing over the original date and/or using whiteout to remove the original date, to make it appear as if the forms were signed on the transaction date,” the SEC said.
By doing so, she created the appearance that certain forms were completed correctly and signed on the date of the transactions, the SEC said.
In some instances, the SEC claimed, Ballek even retroactively created forms for certain trades, adding the trader’s signature to it without the trader’s knowledge before handing the forms over to SEC staff.
Violations
As a result of the conduct described above, the SEC said that Ballek violated Section 204(a) of the Advisers Act, which requires investment advisers to make its records available for examination by representatives of the Commission.
And the SEC contended that Ballek violated Section 206(4) of the Advisers Act and Rule 206(4)-7 requiring an investment adviser registered with the Commission to adopt and implement written policies and procedures reasonably designed to prevent violation of the Advisers Act and rules thereunder by the investment adviser and its supervised persons.