In the Matter of Clarke Lanzen Skalla Investment Firm, Inc.
Securities and Exchange Commission
Investment Advisers Act Release No. 1501 (1995)
Facts
Clarke Lanzen Skalla Investment Firm, Inc. (CLS), an investment adviser registered with the Securities and Exchange Commission (SEC), offered an investment program enabling clients with discretionary accounts to choose from one of six investment strategies and invest their assets in a mix of mutual funds selected by CLS. After each client chose an investment strategy, the client’s assets were pooled and invested identically with the assets of other clients who chose the same strategy. CLS used one custodian for all client assets in the program, and the custodian opened one account in its name, for the benefit of CLS, with each mutual fund, which reflected all shares of that fund owned by CLS clients collectively. Once CLS clients enrolled in the program, CLS did not subsequently contact them to determine whether the investment strategies they selected, or the program’s investments, continued to meet their needs or objectives. CLS clients were not provided with semi-annual or annual reports of the mutual funds in which they invested through the program and could not pledge, hypothecate, or withdraw their mutual-fund shares from the program. The SEC brought an administrative proceeding against the program for violating the Investment Company Act of 1940 (Company Act).
Rule of Law
Issue
Holding and Reasoning ()
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