Broker-Dealer Litigation - Greenberg Traurig LLP

particular, CSIM and CS&Co. marketed the Fund as a “cash alternative” and compared it to a
money market fund without explaining the differences between the Fund and money market
funds. The complaint further alleged that CSIM and CS&Co. misled investors in sales materials
that made it appear that the Fund’s investments were going to mature sooner on average than
they actually would. Additionally, representatives of CSIM and CS&Co. made material
omissions or misstatements in communications to investors in connection with the decline in the
Fund’s net asset value by understating the extent of redemptions experienced by the Fund. The
complaint further alleged that CSIM and CS&Co. had inadequate policies and procedures to
prevent the misuse of material non-public information, resulting in redemptions by affiliates to
the detriment of the Fund’s other investors, and that CSIM aided and abetted Schwab
Investments’ failure to obtain shareholder approval when it deviated from the Fund’s stated
concentration policy.
CSIM and CS&Co. agreed to various undertakings, including the retention of an
independent consultant to review the Firms’ policies and procedures for preventing the misuse of
material, non-public information related to its proprietary mutual funds. The Commission
censured CSIM and ordered it to cease and desist from future violations of Sections 17(a)(2) and
(3) of the Securities Act of 1933, Sections 204A and 206(4) of the Investment Advisers Act of
1940 and Rule 206(4)-8 thereunder and Sections 13(a) and 34(b) of the Investment Company Act
of 1940. The Commission censured CS&Co. and ordered it to cease and desist from future
violations of Sections 17(a)(2) and (3) of the Securities Act, Section 15(g) of the Securities
Exchange Act of 1934 and Section 34(b) of the Investment Company Act. The Commission
ordered Schwab Investments to cease and desist from future violations of Section 34(b) of the
Investment Company Act.
In re Ginder, Release No. 64098, 2011 SEC LEXIS 968 (Mar. 18, 2011).
Q.1.d
The Commission accepted an offer of settlement from Ginder, a registered representative
of a dually registered broker-dealer and investment adviser. In an earlier proceeding brought by
the Commission, a federal district court entered a final judgment by consent against Ginder,
permanently enjoining him from future violations of the antifraud provisions of the federal
securities laws and ordering him to pay a $30,000 civil penalty. The Commission’s complaint
alleged that Ginder and other registered representatives defrauded mutual fund companies and
their shareholders by engaging in market timing on behalf of two hedge fund customers, using
multiple customer account numbers and financial adviser numbers to conceal their fraud. The
Commission suspended Ginder from association and from participating in an offering of penny
stock for nine months.
Q.1.d
In re Banc of Am. Capital Mgmt, LLC, Release No. 9254, 2011 SEC LEXIS 3020 (Aug. 30,
2011).
The Commission accepted an amended offer of settlement from Banc of America Capital
Management, LLC (“BACAP”), BACAP Distributors, LLC, and Banc of America Securities,
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