Williams v. Dover Bay Specialty Insurance Company

 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 95747 / September 13, 2022 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6124 / September 13, 2022 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21069 
 
 
 
In the Matter of 
 
 
BUCKMAN ADVISORY 
GROUP, LLC AND  
HARRY J. BUCKMAN, JR. 
 
 
Respondents. 
 
 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST 
PROCEEDINGS, PURSUANT TO SECTION 
15(b) OF THE SECURITIES EXCHANGE 
ACT OF 1934 AND SECTIONS 203(e), 203(f) 
AND 203(k) OF THE INVESTMENT 
ADVISERS ACT OF 1940, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS AND A CEASE-AND-DESIST 
ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange 
Act”) and Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 (“Advisers 
Act”) against Buckman Advisory Group, LLC (“BAG” or “Firm”) and Harry J. Buckman, Jr. 
(“Buckman”) (together, “Respondents”).   
 
II. 
 
 In anticipation of the institution of these proceedings, BAG and Buckman each submitted 
an Offer of Settlement (the “Offers”) which the Commission has determined to accept.  Solely 
for the purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the 

2 
 
findings herein, except as to the Commission’s jurisdiction over them and the subject matter of 
these proceedings, which are admitted, and except as provided herein in Section V, Respondents 
consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 
Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e), 203(f) 
and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial 
Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 
 
III. 
 
 On the basis of this Order and Respondents’ Offers, the Commission finds
1
 that: 
  
Summary 
 
1. BAG is a New Jersey-based investment adviser registered with the Commission.  
Buckman is a co-owner of the holding company that owns BAG.  Buckman is BAG’s Chief 
Executive Officer and has held that role since at least 2012.  Buckman also held other roles at 
BAG, including Chief Investment Officer (“CIO”) from 2012 until December 2015. Buckman 
was the direct supervisor of Scott Adam Brander (“Brander”), a BAG investment adviser 
representative, for a number of years, including from January 2012 until June 2017 (the 
“Relevant Period”).  He is also an investment adviser representative of BAG.   
 
2. During the Relevant Period, Brander engaged in a fraudulent “cherry-picking” 
scheme, disproportionately allocating profitable trades to himself and unprofitable trades to the 
accounts of certain clients (the “Disfavored Accounts” and “Disfavored Clients”).  Brander also 
often used shares of highly-leveraged and risky exchange traded funds (“ETFs”) in his cherry-
picking scheme, without performing any analysis to determine whether these ETFs were suitable 
for the affected clients, all of whom were seeking more conservative investments.    
 
3. BAG failed to implement policies and procedures reasonably designed to prevent 
violations of the Advisers Act and its rules, and it failed reasonably to supervise Brander.  In 
particular, it failed to conduct effective reviews of Brander’s activities, even when those reviews 
were mandated by its own written compliance manual, and it failed to enforce as to Brander its 
own requirement that trade allocations be submitted at the same time trade orders were placed.  
In addition, BAG’s Form ADV included statements about its practices and procedures that were 
false or misleading in light of the Firm’s compliance and supervision failures.  
 
4. Until December 2015, under BAG’s policies and procedures, Buckman, in his 
CIO role, was responsible for monitoring BAG’s compliance with clients’ investment parameters 
and for reviewing trades and limited investment opportunity allocations, to ensure that no client 
account was systematically disadvantaged.  In addition, from 2013 to 2017, in BAG’s Forms 
                                                 
1
 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  
 

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ADV Part 2A, the Firm disclosed that Buckman, or a compliance officer who reported directly to 
Buckman, was responsible for reviewing client accounts for compliance with clients’ investment 
goals and risk tolerance levels.  Buckman failed to effectively carry out these responsibilities.  
Buckman allowed Brander to create portfolios for his clients that differed from the pre-approved 
portfolios that other BAG investment adviser representatives were required to use and was on 
notice that Brander did not always allocate trades at the time orders were placed, and he failed to 
implement policies and procedures reasonably designed to prevent Advisers Act violations 
associated with Brander’s misconduct.  He also failed reasonably to supervise Brander.   
 
Respondents 
 
5. BAG is a New Jersey limited liability corporation with its principal place of 
business in Little Silver, New Jersey.  BAG has been registered with the Commission as an 
investment adviser since 2004. 
 
6. Buckman, age 53, resides in Monmouth Beach, New Jersey.  Buckman is, and 
during the Relevant Period was, an investment adviser representative associated with BAG, an 
affiliation dating to the Firm’s inception in 2004.  He also is, and during the Relevant Period 
was, a registered representative associated with BAG’s broker-dealer affiliate Buckman, 
Buckman & Reid, LLC (“BBR”).  Buckman and two other family members share ownership of 
BAG. 
 
Other Relevant Individual  
 
7. Brander, age 54, resides in Delray Beach, Florida. Brander was an investment 
adviser representative with BAG from 2007 until 2021.  He was also a registered representative 
with BBR from 2003 to 2021. 
 
Facts 
 
Brander’s Cherry-Picking Scheme 
 
8. During the Relevant Period, Brander managed certain advisory client accounts at 
BAG, including accounts held by the Disfavored Clients, on a discretionary basis – that is, he 
had authorization to make trading decisions on behalf of those clients.   
 
9. None of the Disfavored Clients had a high tolerance for risk; all of them indicated  
in account opening documents that they favored investments with moderate or conservative risk.  
Nor were any of the Disfavored Clients seeking speculative or aggressive growth in their 
portfolios.  Each identified their investment objectives as either preserving capital or moderate 
capital appreciation. 
 
10. During the Relevant Period, Brander also maintained an account in his own name 
and an account jointly held with his wife at BAG (together, the “Brander Accounts”).   

4 
 
 
11. Brander used an average-price account at BBR (the “Average Price Account”) to 
place “block” trades on behalf of his clients’ accounts, as well as the Brander Accounts.   
 
12.  “Cherry-picking” occurs when an investment adviser disproportionately allocates 
to favored accounts securities that have performed well, and/or disproportionately allocates to 
disfavored accounts securities that have performed poorly. 
 
13. From approximately January 2012 through June 2017, Brander used the Average 
Price Account to purchase securities in block trades on behalf of BAG’s advisory clients and the 
Brander Accounts. 
 
14. From at least 2012 to December 2015, BAG’s compliance manual included 
policies and procedures requiring that trade orders include instructions for how the shares in the 
block trade are to be allocated.  However, Brander frequently failed to provide allocation 
instructions for some trades until after the block trade was executed.  Typically, Brander did not 
provide allocation instructions until several hours after the trades were executed, and in some 
cases not until the following day.  Although BAG revised its policies and procedures in 
December 2015, and the revised policies and procedures did not explicitly require that trade 
orders include allocation instructions, investment adviser representatives at BAG other than 
Brander generally continued to provide allocation instructions with trade orders. 
 
15. For some trades, Brander waited to provide allocation instructions until he 
observed which trades were profitable in the hours following execution.  Brander then 
disproportionately allocated profitable trades to the Brander Accounts, and he disproportionately 
allocated unprofitable trades to the Disfavored Accounts.  Often, Brander immediately realized 
profits from the profitable trades by selling shares soon after allocating them to the Brander 
Accounts.   
 
16. Brander allocated 90% of trades with a positive performance between the time of 
execution and the time of allocation (“winning trades”) to the Brander Accounts.  He only 
allocated approximately 30% of trades with a negative performance between the time of 
execution and the time of allocation (“losing trades”) to the Brander Accounts.  In contrast, 
Brander allocated approximately 70% of the losing trades and only 10% of the winning trades to 
the Disfavored Accounts.  
 
17. Because of Brander’s cherry-picking scheme, allocations to the Brander Accounts 
were generally profitable in the short term, with first-day gains of 1.84%, while allocations to the 
Disfavored Accounts were generally unprofitable in the short term, with first-day losses of –
3.24%.  The likelihood that Brander would have earned these returns for himself in the absence 
of cherry-picking, with trade allocations determined by chance, is less than one in a million.   
 
18. As a result of this cherry-picking scheme, Brander obtained ill-gotten gains of at 
least $812,876, which represents the difference between the Brander Accounts’ first-day realized 

5 
 
and unrealized profits from allocations received from the Average Price Account and the losses 
that the Brander Accounts would have sustained had they earned the same first-day rate of return 
on allocations from the Average Price Account as all accounts managed by Brander. 
 
19. Brander typically used highly-leveraged exchange traded funds (“ETFs”) in his 
cherry-picking scheme.  As a result of their highly-leveraged nature, these ETFs often experience 
larger price moves over the course of the trading day.  
 
20. The prospectuses for these ETFs contained numerous warnings, in bold typeface, 
stating that these products were, for example, much riskier than most exchange-traded funds and 
only suitable for knowledgeable investors who understood the risks associated with these 
products’ use of leverage.  Nonetheless, Brander did not conduct any analysis to determine that 
these ETFs were in the best interests of the Disfavored Clients.  Indeed, Brander repeatedly 
allocated highly-leveraged ETFs that had experienced first-day losses into the Disfavored 
Accounts and in some circumstances also held them in the Disfavored Accounts for as long as 
several days, without discussing the attendant risks of these ETFs and their holding periods with 
the Disfavored Clients. 
 
BAG’s and Buckman’s Compliance and Supervision Failures 
 
21. Registered investment advisers are required to adopt and implement written 
policies and procedures reasonably designed to prevent violations of the Advisers Act and the 
rules adopted by the Commission under the Act.  Buckman was Brander’s direct supervisor 
throughout the Relevant Period and was responsible for overseeing Brander’s investment advice 
and trading.  
 
22. From at least 2012 to December 2015, BAG’s compliance manual included 
policies and procedures for “Trade Allocation,” which required block trades to be “allocated in a 
fair and equitable manner” so that “each client will be treated fairly and will not favor any client 
over another.”  Furthermore, BAG’s policies and procedures for the 2012-2015 period required 
“the number of shares of the block trade to be allocated to each specific account prior to placing 
the order.”  BAG’s policies and procedures also required the Firm to “review all allocations of 
trades ... to ensure that the Firm’s policies and procedures were followed and verify that no 
client account was systematically disadvantaged by the allocation.”  From 2012 to December 
2015, Buckman, as Chief Investment Officer, was specifically assigned responsibility in the 
compliance manual for fair and equitable allocation of block trades.  The Firm further required a 
review of a “[c]omparison of [investment advisory representative (“IAR”)] Personal Trading 
Activity vs. IAR Client’s Trading Activity.”    
 
23. BAG’s revised policies and procedures, adopted in December 2015, while no 
longer explicitly assigning this responsibility to Buckman, continued to require that BAG review 
“client accounts quarterly for equitable treatment and review its Allocation practices annually.” 
 

6 
 
24. From at least 2012 to December 2015, BAG’s compliance manual included 
policies and procedures for “Suitability,” which, among other things, acknowledged that the 
Firm owed its clients a fiduciary duty to “[p]rovide advice that is suitable,” and which required 
BAG’s investment adviser representatives to use a “pre-approve[d] ... listing of securities 
offerings; asset allocation models; and/or investment strategies ... with [their] clients.”  BAG’s 
policies and procedures during that time further required the firm to “conduct periodic reviews 
...[to verify that] portfolio holdings are suitable and appropriate for the client’s investment 
profile information in the file.”  From 2012 to December 2015, Buckman, as Chief Investment 
Officer, was specifically assigned responsibility to ensure that client portfolios were consistent 
with each client’s “investment needs, goals, objectives and risk tolerance.”   
 
25. BAG’s revised policies and procedures, adopted in December 2015, while no 
longer explicitly assigning this responsibility to Buckman, continued to require that BAG 
“conduct periodic reviews of remote office [such as Brander’s] client files (maintained by the 
[BAG’s] main office) to verify that they are complete and that portfolio holdings are suitable and 
appropriate for the client’s investment profile information in the file.” 
 
26. In addition, BAG’s Forms ADV filed starting in 2013 through the end of the 
Relevant Period stated that Buckman and two compliance officers who reported directly to 
Buckman conducted “at least quarterly” reviews of client accounts “with regard to clients’ 
respective investment policies and risk tolerance levels.” 
 
27. BAG failed to reasonably implement its written policies and procedures described 
above with regard to account and trade reviews, and in particular with regard to reviews as to 
equitable allocation of trades and suitability.  To the extent that these reviews were conducted at 
all, they were inadequate.  For example, neither Buckman nor others at the Firm conducted reviews 
that were structured appropriately to identify trades in products inconsistent with the clients’ stated 
risk tolerance and investment objectives.  Nor were the Firm’s reviews structured to compare 
trades allocated to an IAR’s account with those allocated to the IAR’s client accounts.  
 
28. In addition, BAG did not enforce its own 2012-2015 written mandate that trade 
allocations be provided together with trade orders.  As described above, to perpetrate his scheme, 
Brander typically delayed trade allocations for hours after trade executions.  Affiliated broker-
dealer BBR’s operations desk was aware of Brander’s practice to delay trade allocations, and 
Buckman himself observed Brander submitting trade allocations late in the trading day on one or 
two occasions, yet neither BAG nor Buckman took any actions to discontinue this practice and to 
insist on contemporaneous order and allocation documentation.  Nor did the Firm or Buckman 
take any steps to assess the impact of Brander’s delayed trade allocations on the Firm’s clients.   
 
29. BAG also failed to enforce as to Brander its own mandate that its investment 
adviser representatives only use pre-approved investment products, allocation models, and 
investment strategies for clients.  The highly-leveraged ETFs used by Brander in his cherry-
picking scheme were not pre-approved by the Firm.  Brander requested and received Buckman’s 
permission to create his own portfolios, rather than using the pre-approved portfolios that other 

7 
 
BAG investment adviser representatives were required to use.  Despite making this exception for 
Brander, Buckman did not require Brander to obtain approval for the securities he purchased for 
his clients.  Moreover, neither the Firm nor Buckman took adequate steps to follow up and assess 
whether, in light of this deviation, Brander’s activities presented any risks to clients, and 
whether, in light of this deviation, Brander abided by the Firm’s suitability policies, other 
policies, and its fiduciary obligations.   
 
BAG’s False or Misleading Form ADV Statements  
 
30. As an investment adviser registered with the Commission, BAG was required to 
file Form ADV with the Commission, and to update it at least annually.  Form ADV includes 
Part 2A, which provides disclosures to advisory clients about the qualifications and business 
practices of investment advisers.  Registered investment advisers are required to deliver Part 2A 
to their clients at the beginning of the advisory relationship and to provide clients with an 
updated Part 2A whenever material changes are made. 
 
31. During the Relevant Period, Part 2A of BAG’s Form ADV stated that “BAG 
generally seeks investment strategies that do not involve significant or unusual risk” and that 
“BAG will always document any transactions that could be construed as conflicts of interest and 
will always transact client business before their own when similar securities are being bought or 
sold.”  Part 2A of BAG’s Form ADV also stated that “client accounts are reviewed at least 
quarterly ... with regard to clients’ respective investment policies and risk tolerance levels.”    
These statements were materially false or misleading in light of BAG’s compliance and 
supervision failures described above.   
 
32. Buckman signed the Firm’s Forms ADV during the Relevant Period, and, through 
his various roles at BAG, was responsible for ensuring that the Firm’s Form ADV did not 
contain false or misleading statements.    
 
Violations 
 
33. As a result of the conduct described above, BAG willfully
2
 violated Section 
206(2) of the Advisers Act, which makes it unlawful for any investment adviser to engage in any 
                                                 
2
 “Willfully,” for purposes of imposing relief under Section15(b) of the Exchange Act and Sections 
203(e) and 203(f) of the Advisers Act, “‘means no more than that the person charged with the duty 
knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes 
v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). The decision in The Robare Group, Ltd. v. SEC, 
which construed the term “willfully” for purposes of a differently structured statutory provision, 
does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing 
required to establish that a person has “willfully omit[ted]” material information from a required 
disclosure in violation of Section 207 of the Advisers Act). 
 

8 
 
transaction, practice or course of business which operates as a fraud or deceit upon any client or 
prospective client. 
 
34. As a result of the conduct described above, BAG willfully violated Section 206(4) 
of the Advisers Act and Rule 206(4)-7 thereunder, which require registered investment advisers 
to adopt and implement written policies and procedures reasonably designed to prevent 
violations of the Advisers Act and the rules promulgated thereunder. 
 
35. As a result of the conduct described above, Buckman caused BAG’s violations of 
Section 206(2) of the Advisers Act.  
 
36. As a result of the conduct described above, Buckman willfully aided and abetted 
and caused BAG’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 
thereunder, which require registered investment advisers to adopt and implement written policies 
and procedures reasonably designed to prevent violations of the Advisers Act and the rules 
promulgated thereunder. 
 
37. As a result of the conduct described above, BAG and Buckman failed reasonably 
to supervise Brander within the meaning of Sections 203(e)(6) and 203(f) of the Advisers Act 
with a view to preventing Brander’s violations of Section 17(a)(1) of the Securities Act, Section 
10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) 
of the Advisers Act.  
 
Undertakings 
 
BAG 
 
BAG has undertaken to: 
 
38. Independent Compliance Consultant 
 
a. Within 90 days of the entry of this Order, BAG shall retain the services of an 
independent compliance consultant (“Independent Consultant”) not unacceptable 
to the Commission staff.  BAG shall require that the Independent Consultant 
conduct a comprehensive compliance review of BAG’s compliance policies and 
procedures designed to promote BAG’s compliance with the Advisers Act and 
rules thereunder with respect to trade allocation, suitability, monitoring of 
employee trading, related potential or actual conflicts of interest, and related 
record-keeping and client disclosures. 
 
b. BAG shall provide to the Commission staff, within 90 days of the entry of this 
Order, a copy of the engagement letter detailing the Independent Consultant’s 
responsibilities. 
 

9 
 
c. BAG shall require the Independent Consultant to submit a written report to BAG 
and to Commission staff within 180 days of the entry of this Order (the “Report”). 
The Report shall describe in detail (1) the Independent Consultant’s review, 
findings, conclusions, and recommendations; (2) any proposals made by BAG; 
and (3) a procedure for BAG to adopt and implement the recommended changes 
in or improvements to its policies and procedures. 
 
d. Within 90 days of receipt of the Report, BAG shall adopt and implement all 
recommendations contained in the report; provided, however, that within 30 days 
of BAG’s receipt of the Report, BAG may, in writing, advise the Independent 
Consultant and the Commission staff of any recommendations that it considers 
unnecessary, unduly burdensome, impractical or inappropriate. With respect to 
any such recommendation, BAG need not adopt that recommendation at that time 
but shall propose in writing an alternative policy, procedure or system designed to 
achieve the same objective or purpose. As to any recommendation on which BAG 
and the Independent Consultant do not agree, such parties shall attempt in good 
faith to reach an agreement within 30 days after BAG provides the alternative 
procedures described above.  In the event that BAG and the Independent 
Consultant are unable to agree on an alternative proposal, BAG and the 
Independent Consultant shall jointly confer with the Commission staff to resolve 
the matter. In the event that, after conferring with the Commission staff, BAG and 
the Independent Consultant are unable to agree on an alternative proposal, BAG 
will abide by the recommendations of the Independent Consultant. 
 
e. Within 30 days of BAG’s adoption of all of the recommendations in the Report, 
BAG shall certify in writing to the Independent Consultant and the Commission 
staff that it has adopted and implemented all of the Independent Consultant’s 
recommendations in the Report. Unless otherwise directed by the Commission 
staff, all Reports, certifications and other documents required to be provided to 
the Commission staff shall be sent to Simona Suh, Assistant Regional Director, 
Securities and Exchange Commission, New York Regional Office, 100 Pearl 
Street, Suite 20-100, New York, NY 10004-2616, or such other address as the 
Commission’s staff may provide.  
 
f. As part of its work with the Independent Consultant, BAG shall cooperate fully 
and provide the Independent Consultant with access to files, books, records, and 
personnel as are reasonably requested by the Independent Consultant for review. 
BAG shall bear all of the Independent Consultant’s compensation and expenses. 
 
g. To ensure the independence of the Independent Consultant, BAG: (1) shall not have 
the authority to terminate the Independent Consultant or substitute another 
independent compliance consultant for the initial Independent Consultant, without 
the prior written approval of the Commission staff; and (2) shall compensate the 

10 
 
Independent Consultant and persons engaged to assist the Independent Consultant 
for services rendered pursuant to this Order at their reasonable and customary rates. 
 
h. BAG shall require the Independent Consultant to enter into an agreement that 
provides that, for the period of engagement and for a period of two years from 
completion of the engagement, the Independent Consultant shall not enter into 
any employment, consultant, attorney-client, auditing, or other professional 
relationship with BAG, or any of its present or former affiliates, principals, 
directors, officers, employees, or agents. The agreement will also provide that the 
Independent Consultant will require that any firm with which the Independent 
Consultant is affiliated or of which the Independent Consultant is a member, and 
any person engaged to assist the Independent Consultant in performance of the 
Independent Consultant’s duties under this Order, shall not, without prior written 
consent of the Commission staff, enter into any employment, consultant, attorney-
client, auditing or other professional relationship with BAG, or any of its present 
or former affiliates, principals, directors, officers, employees, or agents for the 
period of the engagement and for a period of two years after the engagement. 
 
i. The reports by the Independent Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information. Public 
disclosure of the reports could discourage cooperation, impede pending or 
potential government investigations or undermine the objectives of the reporting 
requirement. For these reasons, among others, the reports and the contents thereof 
are intended to remain and shall remain non-public, except (1) pursuant to court 
order, (2) as agreed to by the parties in writing, (3) to the extent that the 
Commission determines in its sole discretion that disclosure would be in 
furtherance of the Commission’s discharge of its duties and responsibilities, or (4) 
is otherwise required by law.  
 
j. For good cause shown and upon timely application by BAG, the Commission 
staff may extend any of the procedural dates set forth in this undertaking. 
 
39. BAG shall certify, in writing, its compliance with the undertakings set forth 
above.  The certification shall identify the undertakings, provide written evidence of compliance 
in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance.  
The Commission staff may make reasonable requests for further evidence of compliance, and 
BAG agrees to provide such evidence.  The certification and supporting material shall be 
submitted to Simona Suh, Assistant Regional Director, with a copy to the Office of Chief 
Counsel of the Enforcement Division, no later than sixty (60) days from the date of the 
completion of the undertakings. 
 
40. BAG shall preserve, for a period of not less than six years from the entry of this 
order, the first two years in an easily accessible place, any record of compliance with the 
undertakings set forth in this Order. 

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Buckman 
 
Buckman has undertaken to: 
 
41. Provide to the Commission, within 30 days after the end of the twelve-month 
limitation period described in paragraph IV.F below, an affidavit that he has complied fully with the 
sanctions described in paragraph IV.F below. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondents’ Offers. 
 
 Accordingly, pursuant to Section 15(b) of the Exchange Act and Sections 203(e), 203(f) 
and 203(k) of the Advisers Act, it is hereby ORDERED that: 
 
BAG  
 
A. BAG cease and desist from committing or causing any violations and any future 
violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. 
 
B. BAG is censured. 
 
C. BAG shall comply with the undertakings enumerated in Section III, paragraphs 38 
through 40, above. 
 
D. BAG shall pay a civil money penalty in the amount of $400,000 to the Securities 
and Exchange Commission.  The Commission may distribute civil money penalties collected in 
this proceeding if, in its discretion, the Commission orders the establishment of a Fair Fund 
pursuant to 15 U.S.C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002.  The 
Commission will hold funds paid pursuant to this paragraph in an account at the United States 
Treasury pending a decision whether the Commission, in its discretion, will seek to distribute 
funds or, subject to Exchange Act Section 21F(g)(3), transfer them to the general fund of the 
United States Treasury.  If timely payment is not made, additional interest shall accrue pursuant 
to 31 U.S.C. § 3717.  Payment shall be made in the following installments:   
 
a. $100,000 within 14 days of the entry of this Order; 
b. $300,000 within one year of the entry of this Order. 
 
Payments shall be applied first to post-order interest, which accrues pursuant to 31 U.S.C. § 
3717.  Prior to making the final payment set forth herein, Respondent shall contact the staff of 
the Commission for the amount due.  If Respondent fails to make any payment by the date 
agreed and/or in the amount agreed according to the schedule set forth above, all outstanding 
payments under this Order, including post-order interest, minus any payments made, shall 

12 
 
become due and payable immediately at the discretion of the staff of the Commission without 
further application to the Commission. 
 
Buckman  
 
E. Buckman cease and desist from committing or causing any violations and any 
future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 
thereunder. 
 
F. Pursuant to Section 203(f) of the Advisers Act and Section 15(b)(6) of the 
Exchange Act, Buckman shall be, and hereby is, subject to the following limitations on his 
activities for a period of twelve months from the entry of this Order: 
 
Buckman shall not act in a supervisory capacity with any broker, dealer, 
investment adviser, municipal securities dealer, municipal advisor, transfer agent, 
or nationally recognized statistical rating organization for the time period 
specified above. 
 
G. Buckman shall comply with the undertaking enumerated in Section III, paragraph 
41, above. 
 
H. Buckman shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $75,000 to the Securities and Exchange Commission.  The Commission 
may distribute civil money penalties collected in this proceeding if, in its discretion, the 
Commission orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 
308(a) of the Sarbanes-Oxley Act of 2002.  The Commission will hold funds paid pursuant to 
this paragraph in an account at the United States Treasury pending a decision whether the 
Commission, in its discretion, will seek to distribute funds or, subject to Exchange Act Section 
21F(g)(3), transfer them to the general fund of the United States Treasury.  If timely payment is 
not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 
Payment of Penalties 
 
I. Payment pursuant to this Order must be made in one of the following ways:   
 
(1) Respondents may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondents may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondents may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  

13 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
BAG or Buckman as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Joseph G. 
Sansone, Chief, Market Abuse Unit, Division of Enforcement, Securities and Exchange 
Commission, 100 Pearl Street, Suite 20-100, New York, New York, 10004-2616. 
 
J. Regardless of whether the Commission in its discretion orders the creation of a 
Fair Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 
penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 
Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 
to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 
amount of any part of Respondents’ payment of a civil penalty in this action (“Penalty Offset”).  
If the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that 
they shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 
Commission's counsel in this action and pay the amount of the Penalty Offset to the Securities 
and Exchange Commission.  Such a payment shall not be deemed an additional civil penalty and 
shall not be deemed to change the amount of the civil penalty imposed in this proceeding.  For 
purposes of this paragraph, a “Related Investor Action” means a private damages action brought 
against Respondent by or on behalf of one or more investors based on substantially the same 
facts as alleged in the Order instituted by the Commission in this proceeding. 
 
V. 
 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in 
Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 
admitted by Respondent Buckman, and further, any debt for disgorgement, prejudgment interest, 
civil penalty or other amounts due by Respondent Buckman under this Order or any other 
judgment, order, consent order, decree or settlement agreement entered in connection with this 
proceeding, is a debt for the violation by Respondent Buckman of the federal securities laws or 
any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the 
Bankruptcy Code, 11 U.S.C. § 523(a)(19). 
 
 By the Commission. 
 
 
Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 95747 / September 13, 2022 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6124 / September 13, 2022 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21069 

 

 

 

In the Matter of 

 

 

BUCKMAN ADVISORY 

GROUP, LLC AND  

HARRY J. BUCKMAN, JR. 

 

 

Respondents. 

 

 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST 

PROCEEDINGS, PURSUANT TO SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934 AND SECTIONS 203(e), 203(f) 

AND 203(k) OF THE INVESTMENT 

ADVISERS ACT OF 1940, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS AND A CEASE-AND-DESIST 

ORDER  

   

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange 

Act”) and Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 (“Advisers 

Act”) against Buckman Advisory Group, LLC (“BAG” or “Firm”) and Harry J. Buckman, Jr. 

(“Buckman”) (together, “Respondents”).   

 

II. 
 

 In anticipation of the institution of these proceedings, BAG and Buckman each submitted 

an Offer of Settlement (the “Offers”) which the Commission has determined to accept.  Solely 

for the purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 



2 

 

findings herein, except as to the Commission’s jurisdiction over them and the subject matter of 

these proceedings, which are admitted, and except as provided herein in Section V, Respondents 

consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 

Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e), 203(f) 

and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial 

Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 

 

III. 
 

 On the basis of this Order and Respondents’ Offers, the Commission finds1 that: 

  

Summary 
 

1. BAG is a New Jersey-based investment adviser registered with the Commission.  

Buckman is a co-owner of the holding company that owns BAG.  Buckman is BAG’s Chief 

Executive Officer and has held that role since at least 2012.  Buckman also held other roles at 

BAG, including Chief Investment Officer (“CIO”) from 2012 until December 2015. Buckman 

was the direct supervisor of Scott Adam Brander (“Brander”), a BAG investment adviser 

representative, for a number of years, including from January 2012 until June 2017 (the 

“Relevant Period”).  He is also an investment adviser representative of BAG.   

 

2. During the Relevant Period, Brander engaged in a fraudulent “cherry-picking” 

scheme, disproportionately allocating profitable trades to himself and unprofitable trades to the 

accounts of certain clients (the “Disfavored Accounts” and “Disfavored Clients”).  Brander also 

often used shares of highly-leveraged and risky exchange traded funds (“ETFs”) in his cherry-

picking scheme, without performing any analysis to determine whether these ETFs were suitable 

for the affected clients, all of whom were seeking more conservative investments.    

 

3. BAG failed to implement policies and procedures reasonably designed to prevent 

violations of the Advisers Act and its rules, and it failed reasonably to supervise Brander.  In 

particular, it failed to conduct effective reviews of Brander’s activities, even when those reviews 

were mandated by its own written compliance manual, and it failed to enforce as to Brander its 

own requirement that trade allocations be submitted at the same time trade orders were placed.  

In addition, BAG’s Form ADV included statements about its practices and procedures that were 

false or misleading in light of the Firm’s compliance and supervision failures.  

 

4. Until December 2015, under BAG’s policies and procedures, Buckman, in his 

CIO role, was responsible for monitoring BAG’s compliance with clients’ investment parameters 

and for reviewing trades and limited investment opportunity allocations, to ensure that no client 

account was systematically disadvantaged.  In addition, from 2013 to 2017, in BAG’s Forms 

                                                 
1 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  

 



3 

 

ADV Part 2A, the Firm disclosed that Buckman, or a compliance officer who reported directly to 

Buckman, was responsible for reviewing client accounts for compliance with clients’ investment 

goals and risk tolerance levels.  Buckman failed to effectively carry out these responsibilities.  

Buckman allowed Brander to create portfolios for his clients that differed from the pre-approved 

portfolios that other BAG investment adviser representatives were required to use and was on 

notice that Brander did not always allocate trades at the time orders were placed, and he failed to 

implement policies and procedures reasonably designed to prevent Advisers Act violations 

associated with Brander’s misconduct.  He also failed reasonably to supervise Brander.   

 

Respondents 

 

5. BAG is a New Jersey limited liability corporation with its principal place of 

business in Little Silver, New Jersey.  BAG has been registered with the Commission as an 

investment adviser since 2004. 

 

6. Buckman, age 53, resides in Monmouth Beach, New Jersey.  Buckman is, and 

during the Relevant Period was, an investment adviser representative associated with BAG, an 

affiliation dating to the Firm’s inception in 2004.  He also is, and during the Relevant Period 

was, a registered representative associated with BAG’s broker-dealer affiliate Buckman, 

Buckman & Reid, LLC (“BBR”).  Buckman and two other family members share ownership of 

BAG. 

 

Other Relevant Individual  

 

7. Brander, age 54, resides in Delray Beach, Florida. Brander was an investment 

adviser representative with BAG from 2007 until 2021.  He was also a registered representative 

with BBR from 2003 to 2021. 

 

Facts 

 

Brander’s Cherry-Picking Scheme 

 

8. During the Relevant Period, Brander managed certain advisory client accounts at 

BAG, including accounts held by the Disfavored Clients, on a discretionary basis – that is, he 

had authorization to make trading decisions on behalf of those clients.   

 

9. None of the Disfavored Clients had a high tolerance for risk; all of them indicated  

in account opening documents that they favored investments with moderate or conservative risk.  

Nor were any of the Disfavored Clients seeking speculative or aggressive growth in their 

portfolios.  Each identified their investment objectives as either preserving capital or moderate 

capital appreciation. 

 

10. During the Relevant Period, Brander also maintained an account in his own name 

and an account jointly held with his wife at BAG (together, the “Brander Accounts”).   



4 

 

 

11. Brander used an average-price account at BBR (the “Average Price Account”) to 

place “block” trades on behalf of his clients’ accounts, as well as the Brander Accounts.   

 

12.  “Cherry-picking” occurs when an investment adviser disproportionately allocates 

to favored accounts securities that have performed well, and/or disproportionately allocates to 

disfavored accounts securities that have performed poorly. 

 

13. From approximately January 2012 through June 2017, Brander used the Average 

Price Account to purchase securities in block trades on behalf of BAG’s advisory clients and the 

Brander Accounts. 

 

14. From at least 2012 to December 2015, BAG’s compliance manual included 

policies and procedures requiring that trade orders include instructions for how the shares in the 

block trade are to be allocated.  However, Brander frequently failed to provide allocation 

instructions for some trades until after the block trade was executed.  Typically, Brander did not 

provide allocation instructions until several hours after the trades were executed, and in some 

cases not until the following day.  Although BAG revised its policies and procedures in 

December 2015, and the revised policies and procedures did not explicitly require that trade 

orders include allocation instructions, investment adviser representatives at BAG other than 

Brander generally continued to provide allocation instructions with trade orders. 

 

15. For some trades, Brander waited to provide allocation instructions until he 

observed which trades were profitable in the hours following execution.  Brander then 

disproportionately allocated profitable trades to the Brander Accounts, and he disproportionately 

allocated unprofitable trades to the Disfavored Accounts.  Often, Brander immediately realized 

profits from the profitable trades by selling shares soon after allocating them to the Brander 

Accounts.   

 

16. Brander allocated 90% of trades with a positive performance between the time of 

execution and the time of allocation (“winning trades”) to the Brander Accounts.  He only 

allocated approximately 30% of trades with a negative performance between the time of 

execution and the time of allocation (“losing trades”) to the Brander Accounts.  In contrast, 

Brander allocated approximately 70% of the losing trades and only 10% of the winning trades to 

the Disfavored Accounts.  

 

17. Because of Brander’s cherry-picking scheme, allocations to the Brander Accounts 

were generally profitable in the short term, with first-day gains of 1.84%, while allocations to the 

Disfavored Accounts were generally unprofitable in the short term, with first-day losses of –

3.24%.  The likelihood that Brander would have earned these returns for himself in the absence 

of cherry-picking, with trade allocations determined by chance, is less than one in a million.   

 

18. As a result of this cherry-picking scheme, Brander obtained ill-gotten gains of at 

least $812,876, which represents the difference between the Brander Accounts’ first-day realized 



5 

 

and unrealized profits from allocations received from the Average Price Account and the losses 

that the Brander Accounts would have sustained had they earned the same first-day rate of return 

on allocations from the Average Price Account as all accounts managed by Brander. 

 

19. Brander typically used highly-leveraged exchange traded funds (“ETFs”) in his 

cherry-picking scheme.  As a result of their highly-leveraged nature, these ETFs often experience 

larger price moves over the course of the trading day.  

 

20. The prospectuses for these ETFs contained numerous warnings, in bold typeface, 

stating that these products were, for example, much riskier than most exchange-traded funds and 

only suitable for knowledgeable investors who understood the risks associated with these 

products’ use of leverage.  Nonetheless, Brander did not conduct any analysis to determine that 

these ETFs were in the best interests of the Disfavored Clients.  Indeed, Brander repeatedly 

allocated highly-leveraged ETFs that had experienced first-day losses into the Disfavored 

Accounts and in some circumstances also held them in the Disfavored Accounts for as long as 

several days, without discussing the attendant risks of these ETFs and their holding periods with 

the Disfavored Clients. 

 

BAG’s and Buckman’s Compliance and Supervision Failures 

 

21. Registered investment advisers are required to adopt and implement written 

policies and procedures reasonably designed to prevent violations of the Advisers Act and the 

rules adopted by the Commission under the Act.  Buckman was Brander’s direct supervisor 

throughout the Relevant Period and was responsible for overseeing Brander’s investment advice 

and trading.  

 

22. From at least 2012 to December 2015, BAG’s compliance manual included 

policies and procedures for “Trade Allocation,” which required block trades to be “allocated in a 

fair and equitable manner” so that “each client will be treated fairly and will not favor any client 

over another.”  Furthermore, BAG’s policies and procedures for the 2012-2015 period required 

“the number of shares of the block trade to be allocated to each specific account prior to placing 

the order.”  BAG’s policies and procedures also required the Firm to “review all allocations of 

trades … to ensure that the Firm’s policies and procedures were followed and verify that no 

client account was systematically disadvantaged by the allocation.”  From 2012 to December 

2015, Buckman, as Chief Investment Officer, was specifically assigned responsibility in the 

compliance manual for fair and equitable allocation of block trades.  The Firm further required a 

review of a “[c]omparison of [investment advisory representative (“IAR”)] Personal Trading 

Activity vs. IAR Client’s Trading Activity.”    

 

23. BAG’s revised policies and procedures, adopted in December 2015, while no 

longer explicitly assigning this responsibility to Buckman, continued to require that BAG review 

“client accounts quarterly for equitable treatment and review its Allocation practices annually.” 

 



6 

 

24. From at least 2012 to December 2015, BAG’s compliance manual included 

policies and procedures for “Suitability,” which, among other things, acknowledged that the 

Firm owed its clients a fiduciary duty to “[p]rovide advice that is suitable,” and which required 

BAG’s investment adviser representatives to use a “pre-approve[d] … listing of securities 

offerings; asset allocation models; and/or investment strategies … with [their] clients.”  BAG’s 

policies and procedures during that time further required the firm to “conduct periodic reviews 

…[to verify that] portfolio holdings are suitable and appropriate for the client’s investment 

profile information in the file.”  From 2012 to December 2015, Buckman, as Chief Investment 

Officer, was specifically assigned responsibility to ensure that client portfolios were consistent 

with each client’s “investment needs, goals, objectives and risk tolerance.”   

 

25. BAG’s revised policies and procedures, adopted in December 2015, while no 

longer explicitly assigning this responsibility to Buckman, continued to require that BAG 

“conduct periodic reviews of remote office [such as Brander’s] client files (maintained by the 

[BAG’s] main office) to verify that they are complete and that portfolio holdings are suitable and 

appropriate for the client’s investment profile information in the file.” 

 

26. In addition, BAG’s Forms ADV filed starting in 2013 through the end of the 

Relevant Period stated that Buckman and two compliance officers who reported directly to 

Buckman conducted “at least quarterly” reviews of client accounts “with regard to clients’ 

respective investment policies and risk tolerance levels.” 

 

27. BAG failed to reasonably implement its written policies and procedures described 

above with regard to account and trade reviews, and in particular with regard to reviews as to 

equitable allocation of trades and suitability.  To the extent that these reviews were conducted at 

all, they were inadequate.  For example, neither Buckman nor others at the Firm conducted reviews 

that were structured appropriately to identify trades in products inconsistent with the clients’ stated 

risk tolerance and investment objectives.  Nor were the Firm’s reviews structured to compare 

trades allocated to an IAR’s account with those allocated to the IAR’s client accounts.  

 

28. In addition, BAG did not enforce its own 2012-2015 written mandate that trade 

allocations be provided together with trade orders.  As described above, to perpetrate his scheme, 

Brander typically delayed trade allocations for hours after trade executions.  Affiliated broker-

dealer BBR’s operations desk was aware of Brander’s practice to delay trade allocations, and 

Buckman himself observed Brander submitting trade allocations late in the trading day on one or 

two occasions, yet neither BAG nor Buckman took any actions to discontinue this practice and to 

insist on contemporaneous order and allocation documentation.  Nor did the Firm or Buckman 

take any steps to assess the impact of Brander’s delayed trade allocations on the Firm’s clients.   

 

29. BAG also failed to enforce as to Brander its own mandate that its investment 

adviser representatives only use pre-approved investment products, allocation models, and 

investment strategies for clients.  The highly-leveraged ETFs used by Brander in his cherry-

picking scheme were not pre-approved by the Firm.  Brander requested and received Buckman’s 

permission to create his own portfolios, rather than using the pre-approved portfolios that other 



7 

 

BAG investment adviser representatives were required to use.  Despite making this exception for 

Brander, Buckman did not require Brander to obtain approval for the securities he purchased for 

his clients.  Moreover, neither the Firm nor Buckman took adequate steps to follow up and assess 

whether, in light of this deviation, Brander’s activities presented any risks to clients, and 

whether, in light of this deviation, Brander abided by the Firm’s suitability policies, other 

policies, and its fiduciary obligations.   

 

BAG’s False or Misleading Form ADV Statements  

 

30. As an investment adviser registered with the Commission, BAG was required to 

file Form ADV with the Commission, and to update it at least annually.  Form ADV includes 

Part 2A, which provides disclosures to advisory clients about the qualifications and business 

practices of investment advisers.  Registered investment advisers are required to deliver Part 2A 

to their clients at the beginning of the advisory relationship and to provide clients with an 

updated Part 2A whenever material changes are made. 

 

31. During the Relevant Period, Part 2A of BAG’s Form ADV stated that “BAG 

generally seeks investment strategies that do not involve significant or unusual risk” and that 

“BAG will always document any transactions that could be construed as conflicts of interest and 

will always transact client business before their own when similar securities are being bought or 

sold.”  Part 2A of BAG’s Form ADV also stated that “client accounts are reviewed at least 

quarterly … with regard to clients’ respective investment policies and risk tolerance levels.”    

These statements were materially false or misleading in light of BAG’s compliance and 

supervision failures described above.   

 

32. Buckman signed the Firm’s Forms ADV during the Relevant Period, and, through 

his various roles at BAG, was responsible for ensuring that the Firm’s Form ADV did not 

contain false or misleading statements.    

 

Violations 
 

33. As a result of the conduct described above, BAG willfully2 violated Section 

206(2) of the Advisers Act, which makes it unlawful for any investment adviser to engage in any 

                                                 
2 “Willfully,” for purposes of imposing relief under Section15(b) of the Exchange Act and Sections 

203(e) and 203(f) of the Advisers Act, “‘means no more than that the person charged with the duty 

knows what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes 

v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)). The decision in The Robare Group, Ltd. v. SEC, 

which construed the term “willfully” for purposes of a differently structured statutory provision, 

does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing 

required to establish that a person has “willfully omit[ted]” material information from a required 

disclosure in violation of Section 207 of the Advisers Act). 

 



8 

 

transaction, practice or course of business which operates as a fraud or deceit upon any client or 

prospective client. 

 

34. As a result of the conduct described above, BAG willfully violated Section 206(4) 

of the Advisers Act and Rule 206(4)-7 thereunder, which require registered investment advisers 

to adopt and implement written policies and procedures reasonably designed to prevent 

violations of the Advisers Act and the rules promulgated thereunder. 

 

35. As a result of the conduct described above, Buckman caused BAG’s violations of 

Section 206(2) of the Advisers Act.  

 

36. As a result of the conduct described above, Buckman willfully aided and abetted 

and caused BAG’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 

thereunder, which require registered investment advisers to adopt and implement written policies 

and procedures reasonably designed to prevent violations of the Advisers Act and the rules 

promulgated thereunder. 

 

37. As a result of the conduct described above, BAG and Buckman failed reasonably 

to supervise Brander within the meaning of Sections 203(e)(6) and 203(f) of the Advisers Act 

with a view to preventing Brander’s violations of Section 17(a)(1) of the Securities Act, Section 

10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) 

of the Advisers Act.  

 

Undertakings 

 

BAG 

 

BAG has undertaken to: 

 

38. Independent Compliance Consultant 

 

a. Within 90 days of the entry of this Order, BAG shall retain the services of an 

independent compliance consultant (“Independent Consultant”) not unacceptable 

to the Commission staff.  BAG shall require that the Independent Consultant 

conduct a comprehensive compliance review of BAG’s compliance policies and 

procedures designed to promote BAG’s compliance with the Advisers Act and 

rules thereunder with respect to trade allocation, suitability, monitoring of 

employee trading, related potential or actual conflicts of interest, and related 

record-keeping and client disclosures. 

 

b. BAG shall provide to the Commission staff, within 90 days of the entry of this 

Order, a copy of the engagement letter detailing the Independent Consultant’s 

responsibilities. 

 



9 

 

c. BAG shall require the Independent Consultant to submit a written report to BAG 

and to Commission staff within 180 days of the entry of this Order (the “Report”). 

The Report shall describe in detail (1) the Independent Consultant’s review, 

findings, conclusions, and recommendations; (2) any proposals made by BAG; 

and (3) a procedure for BAG to adopt and implement the recommended changes 

in or improvements to its policies and procedures. 

 

d. Within 90 days of receipt of the Report, BAG shall adopt and implement all 

recommendations contained in the report; provided, however, that within 30 days 

of BAG’s receipt of the Report, BAG may, in writing, advise the Independent 

Consultant and the Commission staff of any recommendations that it considers 

unnecessary, unduly burdensome, impractical or inappropriate. With respect to 

any such recommendation, BAG need not adopt that recommendation at that time 

but shall propose in writing an alternative policy, procedure or system designed to 

achieve the same objective or purpose. As to any recommendation on which BAG 

and the Independent Consultant do not agree, such parties shall attempt in good 

faith to reach an agreement within 30 days after BAG provides the alternative 

procedures described above.  In the event that BAG and the Independent 

Consultant are unable to agree on an alternative proposal, BAG and the 

Independent Consultant shall jointly confer with the Commission staff to resolve 

the matter. In the event that, after conferring with the Commission staff, BAG and 

the Independent Consultant are unable to agree on an alternative proposal, BAG 

will abide by the recommendations of the Independent Consultant. 

 

e. Within 30 days of BAG’s adoption of all of the recommendations in the Report, 

BAG shall certify in writing to the Independent Consultant and the Commission 

staff that it has adopted and implemented all of the Independent Consultant’s 

recommendations in the Report. Unless otherwise directed by the Commission 

staff, all Reports, certifications and other documents required to be provided to 

the Commission staff shall be sent to Simona Suh, Assistant Regional Director, 

Securities and Exchange Commission, New York Regional Office, 100 Pearl 

Street, Suite 20-100, New York, NY 10004-2616, or such other address as the 

Commission’s staff may provide.  

 

f. As part of its work with the Independent Consultant, BAG shall cooperate fully 

and provide the Independent Consultant with access to files, books, records, and 

personnel as are reasonably requested by the Independent Consultant for review. 

BAG shall bear all of the Independent Consultant’s compensation and expenses. 

 

g. To ensure the independence of the Independent Consultant, BAG: (1) shall not have 

the authority to terminate the Independent Consultant or substitute another 

independent compliance consultant for the initial Independent Consultant, without 

the prior written approval of the Commission staff; and (2) shall compensate the 



10 

 

Independent Consultant and persons engaged to assist the Independent Consultant 

for services rendered pursuant to this Order at their reasonable and customary rates. 

 

h. BAG shall require the Independent Consultant to enter into an agreement that 

provides that, for the period of engagement and for a period of two years from 

completion of the engagement, the Independent Consultant shall not enter into 

any employment, consultant, attorney-client, auditing, or other professional 

relationship with BAG, or any of its present or former affiliates, principals, 

directors, officers, employees, or agents. The agreement will also provide that the 

Independent Consultant will require that any firm with which the Independent 

Consultant is affiliated or of which the Independent Consultant is a member, and 

any person engaged to assist the Independent Consultant in performance of the 

Independent Consultant’s duties under this Order, shall not, without prior written 

consent of the Commission staff, enter into any employment, consultant, attorney-

client, auditing or other professional relationship with BAG, or any of its present 

or former affiliates, principals, directors, officers, employees, or agents for the 

period of the engagement and for a period of two years after the engagement. 

 

i. The reports by the Independent Consultant will likely include confidential 

financial, proprietary, competitive business or commercial information. Public 

disclosure of the reports could discourage cooperation, impede pending or 

potential government investigations or undermine the objectives of the reporting 

requirement. For these reasons, among others, the reports and the contents thereof 

are intended to remain and shall remain non-public, except (1) pursuant to court 

order, (2) as agreed to by the parties in writing, (3) to the extent that the 

Commission determines in its sole discretion that disclosure would be in 

furtherance of the Commission’s discharge of its duties and responsibilities, or (4) 

is otherwise required by law.  

 

j. For good cause shown and upon timely application by BAG, the Commission 

staff may extend any of the procedural dates set forth in this undertaking. 

 

39. BAG shall certify, in writing, its compliance with the undertakings set forth 

above.  The certification shall identify the undertakings, provide written evidence of compliance 

in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance.  

The Commission staff may make reasonable requests for further evidence of compliance, and 

BAG agrees to provide such evidence.  The certification and supporting material shall be 

submitted to Simona Suh, Assistant Regional Director, with a copy to the Office of Chief 

Counsel of the Enforcement Division, no later than sixty (60) days from the date of the 

completion of the undertakings. 

 

40. BAG shall preserve, for a period of not less than six years from the entry of this 

order, the first two years in an easily accessible place, any record of compliance with the 

undertakings set forth in this Order. 



11 

 

Buckman 

 

Buckman has undertaken to: 

 

41. Provide to the Commission, within 30 days after the end of the twelve-month 

limitation period described in paragraph IV.F below, an affidavit that he has complied fully with the 

sanctions described in paragraph IV.F below. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondents’ Offers. 

 

 Accordingly, pursuant to Section 15(b) of the Exchange Act and Sections 203(e), 203(f) 

and 203(k) of the Advisers Act, it is hereby ORDERED that: 

 

BAG  

 

A. BAG cease and desist from committing or causing any violations and any future 

violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. 

 

B. BAG is censured. 

 

C. BAG shall comply with the undertakings enumerated in Section III, paragraphs 38 

through 40, above. 

 

D. BAG shall pay a civil money penalty in the amount of $400,000 to the Securities 

and Exchange Commission.  The Commission may distribute civil money penalties collected in 

this proceeding if, in its discretion, the Commission orders the establishment of a Fair Fund 

pursuant to 15 U.S.C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002.  The 

Commission will hold funds paid pursuant to this paragraph in an account at the United States 

Treasury pending a decision whether the Commission, in its discretion, will seek to distribute 

funds or, subject to Exchange Act Section 21F(g)(3), transfer them to the general fund of the 

United States Treasury.  If timely payment is not made, additional interest shall accrue pursuant 

to 31 U.S.C. § 3717.  Payment shall be made in the following installments:   

 

a. $100,000 within 14 days of the entry of this Order; 

b. $300,000 within one year of the entry of this Order. 

 

Payments shall be applied first to post-order interest, which accrues pursuant to 31 U.S.C. § 

3717.  Prior to making the final payment set forth herein, Respondent shall contact the staff of 

the Commission for the amount due.  If Respondent fails to make any payment by the date 

agreed and/or in the amount agreed according to the schedule set forth above, all outstanding 

payments under this Order, including post-order interest, minus any payments made, shall 



12 

 

become due and payable immediately at the discretion of the staff of the Commission without 

further application to the Commission. 

 

Buckman  

 

E. Buckman cease and desist from committing or causing any violations and any 

future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 

thereunder. 

 

F. Pursuant to Section 203(f) of the Advisers Act and Section 15(b)(6) of the 

Exchange Act, Buckman shall be, and hereby is, subject to the following limitations on his 

activities for a period of twelve months from the entry of this Order: 

 

Buckman shall not act in a supervisory capacity with any broker, dealer, 

investment adviser, municipal securities dealer, municipal advisor, transfer agent, 

or nationally recognized statistical rating organization for the time period 

specified above. 

 

G. Buckman shall comply with the undertaking enumerated in Section III, paragraph 

41, above. 

 

H. Buckman shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $75,000 to the Securities and Exchange Commission.  The Commission 

may distribute civil money penalties collected in this proceeding if, in its discretion, the 

Commission orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 

308(a) of the Sarbanes-Oxley Act of 2002.  The Commission will hold funds paid pursuant to 

this paragraph in an account at the United States Treasury pending a decision whether the 

Commission, in its discretion, will seek to distribute funds or, subject to Exchange Act Section 

21F(g)(3), transfer them to the general fund of the United States Treasury.  If timely payment is 

not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

Payment of Penalties 

 

I. Payment pursuant to this Order must be made in one of the following ways:   

 

(1) Respondents may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondents may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondents may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

http://www.sec.gov/about/offices/ofm.htm


13 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

BAG or Buckman as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Joseph G. 

Sansone, Chief, Market Abuse Unit, Division of Enforcement, Securities and Exchange 

Commission, 100 Pearl Street, Suite 20-100, New York, New York, 10004-2616. 

 

J. Regardless of whether the Commission in its discretion orders the creation of a 

Fair Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 

Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 

to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 

amount of any part of Respondents’ payment of a civil penalty in this action (“Penalty Offset”).  

If the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that 

they shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 

Commission's counsel in this action and pay the amount of the Penalty Offset to the Securities 

and Exchange Commission.  Such a payment shall not be deemed an additional civil penalty and 

shall not be deemed to change the amount of the civil penalty imposed in this proceeding.  For 

purposes of this paragraph, a “Related Investor Action” means a private damages action brought 

against Respondent by or on behalf of one or more investors based on substantially the same 

facts as alleged in the Order instituted by the Commission in this proceeding. 

 

V. 

 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in 

Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 

admitted by Respondent Buckman, and further, any debt for disgorgement, prejudgment interest, 

civil penalty or other amounts due by Respondent Buckman under this Order or any other 

judgment, order, consent order, decree or settlement agreement entered in connection with this 

proceeding, is a debt for the violation by Respondent Buckman of the federal securities laws or 

any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the 

Bankruptcy Code, 11 U.S.C. § 523(a)(19). 

 

 By the Commission. 

 

 

Vanessa A. Countryman 

       Secretary