SEC v. Cambridge Investment Research Advisors, Inc.; and Cambridge Investment Research, Inc., No. 4:22-cv-00071-SMR, Southern District of Iowa (Mar. 20, 2025) — Judgment

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF IOWA
CENTRAL DIVISION

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,

Plaintiff,

v.

CAMBRIDGE INVESTMENT RESEARCH
ADVISORS, INC.,

Defendant,

and

CAMBRIDGE INVESTMENT
RESEARCH, INC.,

Relief Defendant.
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Case No. 4:22-cv-00071-SMR-SBJ

FINAL JUDGMENT AS TO
DEFENDANT CAMBRIDGE
INVESTMENT RESEARCH ADVISORS,
INC.

The Securities and Exchange Commission (“Commission”) having filed a Complaint and
Defendant  Cambridge  Investment  Research  Advisors,  Inc.  (“CIRA”  or  “Defendant”)  having
entered  a  general  appearance;  consented  to  the Court’s  jurisdiction  over  Defendant  and  the
subject  matter  of  this  action;  consented  to  entry  of  this  Final  Judgment  without  admitting  or
denying the allegations of the Complaint (except as to jurisdiction); waived findings of fact and
conclusions of law; and waived any right to appeal from this Final Judgment:
I.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is

permanently restrained and enjoined from violating, directly or indirectly, Section 206(2) of the

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Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. § 80b-6(2)]  by using the mails or
any  means  or  instrumentality  of  interstate  commerce,  directly  or  indirectly,  to  engage  in  any
transaction, practice, or course of business which operates as a fraud or deceit upon any client or
prospective client.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive  actual  notice  of  this  Final  Judgment  by personal service or otherwise: (a) Defendant’s
officers,  agents,  servants,  employees,  and  attorneys;  and  (b)  other  persons  in  active  concert  or
participation with Defendant or with anyone described in (a).
II.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant

is permanently restrained and enjoined from violating Section 206(4) of the Advisers Act [15

U.S.C. § 80b-6(4)] and Rule 206(4)-7 thereunder [17 C.F.R. § 275.206(4)-7] by use of the mails
or any means or instrumentality of interstate commerce, directly or indirectly, while acting as an
investment  adviser  registered  or  required  to  be  registered  with  the  Commission,  to  provide
investment advice to clients without adopting and implementing written policies and procedures
reasonably designed to prevent violation, by Defendant or Defendant’s supervised persons, of the
Advisers Act and the rules the Commission has adopted under the Advisers Act.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s
officers,  agents,  servants,  employees,  and attorneys;  and  (b)  other  persons  in  active  concert  or
participation with Defendant or with anyone described in (a).

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III.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant

is liable for disgorgement of $10,164,698, representing net profits gained and net losses avoided
as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in
the  amount  of  $3,035,302,  and  a  civil  penalty  in  the amount  of  $1,800,000  pursuant  to  Section
209(e)  of  the  Advisers  Act. Defendant  shall  satisfy  this  obligation  by  paying  $15,000,000  in
accordance with Section IV within 14 days after entry of this Final Judgment.
The Commission may enforce the Court’s judgment for disgorgement and prejudgment
interest  by  using  all  collection  procedures  authorized  by  law,  including,  but  not  limited  to,
moving for civil contempt at any time after 30 days following entry of this Final Judgment.
The  Commission  may  enforce  the  Court’s  judgment  for  penalties  by  the  use  of  all
collection procedures authorized by law, including the Federal Debt Collection Procedures Act,
28  U.S.C.  §  3001 et  seq., and  moving  for  civil  contempt  for  the  violation  of  any  Court  orders
issued  in  this  action. Defendant  shall  pay  post-judgment  interest  on  any  amounts  due  after  30
days  of  the  entry  of  this  Final  Judgment  pursuant  to  28  U.S.C.  §  1961. The  Commission  shall
hold the funds, together with any interest and income earned thereon (collectively, the “Fund”),
pending further order of the Court.
The  Court  hereby  establishes  a  Fund  pursuant  to  the  Fair  Fund  provisions  of  Section
308(a) of the Sarbanes-Oxley Act of 2002 (the “Fair Fund”) for the disgorgement, prejudgment
interest, and civil penalties ordered.
Amounts ordered to be paid as civil penalties pursuant to this Judgment 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, Defendant shall not, after offset or reduction of any award of

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compensatory  damages  in  any  Related  Investor  Action  based  on  Defendant’s  payment  of
disgorgement  in  this  action,  argue  that  it  is  entitled  to,  nor  shall  it  further  benefit  by,  offset  or
reduction of such compensatory damages award by the amount of any part of Defendant’s
payment of a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor
Action grants such a Penalty Offset, Defendant 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 United States Treasury or to a Fair Fund, as the Commission directs.
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  Judgment. For  purposes  of  this
paragraph,  a  “Related  Investor  Action”  means  a  private  damages  action  brought  against
Defendant  by  or  on  behalf  of  one  or  more  investors  based  on  substantially  the  same  facts  as
alleged in the Complaint in this action.
IV.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is

incorporated herein with the same force and effect as if fully set forth herein, and that Defendant
shall  comply  with  all  of  the  undertakings  and  agreements  set  forth  therein,  including,  but  not
limited to, the undertakings to:
(i) Within fourteen (14) days of the entry of the Final Judgment, Defendant shall
deposit $15,000,000 (the Fair Fund) into an escrow account at a financial institution
not unacceptable to the Commission staff and Defendant shall provide evidence of
such deposit in a form acceptable to the Commission staff. By making this payment,
Defendant relinquishes all legal and equitable right, title, and interest in such funds
and no part of the funds shall be returned to Defendant. The account holding the

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assets of the Fair Fund shall bear the name and the taxpayer identification number of
the Fair Fund. If timely payment into the escrow account is not made, additional
interest shall accrue pursuant to SEC Rule of Practice 600 [17 C.F.R. § 201.600]
and/or 31 U.S.C. § 3717.
(ii) Defendant shall be responsible for administering the Fair Fund and may hire a
professional at its own cost to assist it in the administration of the distribution. The
costs and expenses of administering the Fair Fund, including any such professional
services, shall be borne by Defendant and shall not be paid out of the Fair Fund.
(iii) Defendant shall distribute from the Fair Fund an amount based on the financial harm
to current and former CIRA advisory clients between January 1, 2014 and December
31, 2021, consisting of (a) the amount of excess fees paid by clients who purchased
or held no-transaction fee mutual fund share classes that generated revenue sharing
when a share class of the same fund was available to the client with a lower expense
ratio; (b) the amount of reduced return for clients who purchased or held cash sweep
money market funds that generated revenue sharing when a share class of the same
fund, or a nearly identical fund, was available to the client with a higher return; and
(c) the amount of excess fees paid by clients who were converted from a non-
retirement, traditional non-wrap account to CIRA’s WealthPort Wrap program and
incurred higher fees than they would have had they not been converted (collectively
“Affected Advisory Clients”). The distribution will be made pursuant to a
disbursement calculation (the “Calculation”) that will be submitted to, reviewed, and
approved by the Commission staff in accordance with Section IV. To the extent the
total amount of financial harm to Affected Advisory Clients exceeds the amount of

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the Fair Fund, Defendant will calculate and distribute a pro rata percentage of the
Fair Fund to each Affected Advisory Client based on the client’s pro rata financial
harm during the period. The Calculation shall be subject to a de minimis threshold.
No portion of the Fair Fund shall be paid to any account in which CIRA, Cambridge
Investment Research, Inc., or any of their current or former officers or directors has
a financial interest.
(iv) Defendant shall, within ninety (90) days of the entry of the Final Judgment, submit
the Calculation to the Commission staff for review and approval. At or around the
time of submission of the proposed Calculation to the staff, Defendant shall make
itself available, and shall require any third parties or professionals retained by
Defendant to assist in formulating the methodology for its Calculation and/or
administration of the distribution to be available for a conference call with the
Commission staff to explain the methodology used in preparing the proposed
Calculation and its implementation, and to provide the staff with an opportunity to
ask questions. Defendant also shall provide the Commission staff such additional
information and supporting documentation as the Commission staff may request for
the purpose of its review. In the event of one or more objections by the Commission
staff to Defendant’s proposed Calculation or any of its information or supporting
documentation, Defendant shall submit a revised Calculation for the review and
approval of the Commission staff or additional information or supporting
documentation within ten (10) days of the date that the Commission staff notifies
Defendant of the objection. The revised Calculation shall be subject to all of the
provisions set forth in Section IV.

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(v) Defendant shall, within thirty (30) days of the written approval of the Calculation by
the Commission staff, submit a payment file (the “Payment File”) for review and
acceptance by the Commission staff demonstrating the application of the
methodology to each Affected Advisory Client. The Payment File should identify,
at a minimum: (1) the name of each Affected Advisory Client; (2) the net amount of
the payment to be made, less any tax withholding; (3) the amount of any de minimis
threshold to be applied; and (4) the amount of reasonable interest paid, if applicable.
Defendant shall exclude from the Payment File all payments to payees that appear
on the U.S. Treasury Department Specially Designated Nationals List.
(vi) Defendant shall, within thirty (30) days of the date the Commission staff approves
the Payment File, notify Affected Advisory Clients of the settlement terms of the
Final  Judgment  to  each  Affected  Advisory  Client  via  mail,  email,  or  such  other
method not unacceptable to the Commission staff, together with a cover letter in a
form not unacceptable to the Commission staff.
(vii) Defendant shall disburse all amounts payable to Affected Advisory Clients within
ninety (90) days of the date the Commission staff approves the Payment File.
Defendant shall notify the Commission staff of the date[s] and the amounts paid in
the distribution.
(viii) If Defendant is unable to distribute or return any portion of the Fair Fund for any
reason, including an inability to locate an Affected Advisory Client or a beneficial
owner of an Affected Advisory Client’s account or any other factors beyond
Defendant’s control, Defendant shall transfer any such undistributed funds to the
Commission for transmittal to the United States Treasury subject to Section

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21F(g)(3) of the Securities Exchange Act of 1934 once the distribution of funds is
complete. Payment must be made in one of the following ways:
(a) Defendant may transmit payment electronically to the Commission,
which will provide detailed ACH transfer/Fedwire instructions upon request;
(b) Defendant 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
(c) Defendant 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:
Enterprise Services Center
Accounts    Receivable    Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
(ix) Payments by check or money order must be accompanied by a cover letter
identifying the payor as a Defendant 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 Jeffrey Shank, Assistant Regional Director, Securities and Exchange
Commission, 175 West Jackson Boulevard, Suite 1450, Chicago, IL 60604.
(x) A Fair Fund is a Qualified Settlement Fund (“QSF”) under Section 468B(g) of the
Internal Revenue Code (“IRC”), 26 U.S.C. §§ 1.468B.1-1.468B.5. Defendant agrees
to be responsible for all tax compliance responsibilities associated with the Fair
Fund’s status as a QSF. These responsibilities involve reporting and paying
requirements of the Fund, including but not limited to: (1) tax returns for the Fair
Fund; (2) information return reporting regarding payments to Affected Advisory

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Clients, as required by applicable codes and regulations; and (3) obligations
resulting from compliance with the Foreign Account Tax Compliance Act.
Defendant may retain any professional services necessary. The costs and expenses
of tax compliance, including any such professional services, shall be borne by
Defendant and shall not be paid out of the Fair Fund.
(xi) Within one hundred fifty (150) days after Defendant completes the disbursement of
all amounts payable to Affected Advisory Clients, Defendant shall return all
undisbursed funds to the Commission pursuant to the instructions set forth in this
Section IV. Defendant shall then submit to the Commission staff a final accounting
and certification of the disposition of the Fair Fund for the Commission to submit for
Court approval, which final accounting and certification shall include, but not be
limited to: (1) the amount paid to each payee, with the reasonable interest amount, if
any, reported separately; (2) the date of each payment; (3) the check number or other
identifier of the money transferred; (4) the amount of any returned payment and the
date received; (5) a description of the efforts to locate a prospective payee whose
payment was returned or to whom payment was not made for any reason; (6) the
total amount, if any, to be forwarded to the Commission, which will present the
Court with a recommendation for disposition of the funds; and (7) an affirmation
that Defendant has made payments from the Fair Fund to affected investors in
accordance with the Calculation approved by the Commission staff. The final
accounting and certification shall be submitted under a cover letter that identifies
Defendant and the file number of these proceedings to Jeffrey Shank, Assistant
Regional Director, Securities and Exchange Commission, 175 West Jackson

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Boulevard, Suite 1450, Chicago, IL 60604. Defendant shall provide any and all
supporting documentation for the accounting and certification to the Commission
staff upon its request and shall cooperate with any additional requests by the
Commission staff in connection with the accounting and certification.
(xii) The Court may extend any of the procedural dates set forth in this Section IV for
good cause shown. Deadlines for dates relating to the Fair Fund shall be counted in
calendar days, except if the last day falls on a weekend or federal holiday, the next
business day shall be considered the last day.
VI.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.

IT IS SO ORDERED.
 Dated this 19th day of March, 2025.

_________________________________
       STEPHANIE M. ROSE, CHIEF JUDGE
       UNITED STATES DISTRICT COURT

IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF IOWA 

CENTRAL DIVISION 

 

 

UNITED STATES SECURITIES AND 

EXCHANGE COMMISSION, 

 

Plaintiff, 

 

v. 

 

CAMBRIDGE INVESTMENT RESEARCH 

ADVISORS, INC.,  

 

Defendant, 

 

and  

 

CAMBRIDGE INVESTMENT 

RESEARCH, INC., 

 

Relief Defendant. 

) 

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Case No. 4:22-cv-00071-SMR-SBJ 

 

  

 

 

FINAL JUDGMENT AS TO 

DEFENDANT CAMBRIDGE 

INVESTMENT RESEARCH ADVISORS, 

INC.   

 

 

The Securities and Exchange Commission (“Commission”) having filed a Complaint and 

Defendant Cambridge Investment Research Advisors, Inc. (“CIRA” or “Defendant”) having 

entered a general appearance; consented to the Court’s jurisdiction over Defendant and the 

subject matter of this action; consented to entry of this Final Judgment without admitting or 

denying the allegations of the Complaint (except as to jurisdiction); waived findings of fact and 

conclusions of law; and waived any right to appeal from this Final Judgment: 

I. 

 

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is 

 

permanently restrained and enjoined from violating, directly or indirectly, Section 206(2) of the 

Case 4:22-cv-00071-SMR-SBJ     Document 249     Filed 03/19/25     Page 1 of 10



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Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. § 80b-6(2)] by using the mails or 

any means or instrumentality of interstate commerce, directly or indirectly, to engage in any 

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

prospective client. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

II. 

 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

 

is permanently restrained and enjoined from violating Section 206(4) of the Advisers Act [15 

 

U.S.C. § 80b-6(4)] and Rule 206(4)-7 thereunder [17 C.F.R. § 275.206(4)-7] by use of the mails 

or any means or instrumentality of interstate commerce, directly or indirectly, while acting as an 

investment adviser registered or required to be registered with the Commission, to provide 

investment advice to clients without adopting and implementing written policies and procedures 

reasonably designed to prevent violation, by Defendant or Defendant’s supervised persons, of the 

Advisers Act and the rules the Commission has adopted under the Advisers Act. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant’s 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

Case 4:22-cv-00071-SMR-SBJ     Document 249     Filed 03/19/25     Page 2 of 10



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III. 

 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

 

is liable for disgorgement of $10,164,698, representing net profits gained and net losses avoided 

as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in 

the amount of $3,035,302, and a civil penalty in the amount of $1,800,000 pursuant to Section 

209(e) of the Advisers Act. Defendant shall satisfy this obligation by paying $15,000,000 in 

accordance with Section IV within 14 days after entry of this Final Judgment. 

The Commission may enforce the Court’s judgment for disgorgement and prejudgment 

interest by using all collection procedures authorized by law, including, but not limited to, 

moving for civil contempt at any time after 30 days following entry of this Final Judgment. 

The Commission may enforce the Court’s judgment for penalties by the use of all 

collection procedures authorized by law, including the Federal Debt Collection Procedures Act, 

28 U.S.C. § 3001 et seq., and moving for civil contempt for the violation of any Court orders 

issued in this action. Defendant shall pay post-judgment interest on any amounts due after 30 

days of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961. The Commission shall 

hold the funds, together with any interest and income earned thereon (collectively, the “Fund”), 

pending further order of the Court. 

The Court hereby establishes a Fund pursuant to the Fair Fund provisions of Section 

308(a) of the Sarbanes-Oxley Act of 2002 (the “Fair Fund”) for the disgorgement, prejudgment 

interest, and civil penalties ordered. 

Amounts ordered to be paid as civil penalties pursuant to this Judgment 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, Defendant shall not, after offset or reduction of any award of 

Case 4:22-cv-00071-SMR-SBJ     Document 249     Filed 03/19/25     Page 3 of 10



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compensatory damages in any Related Investor Action based on Defendant’s payment of 

disgorgement in this action, argue that it is entitled to, nor shall it further benefit by, offset or 

reduction of such compensatory damages award by the amount of any part of Defendant’s 

payment of a civil penalty in this action (“Penalty Offset”). If the court in any Related Investor 

Action grants such a Penalty Offset, Defendant 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 United States Treasury or to a Fair Fund, as the Commission directs. 

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 Judgment. For purposes of this 

paragraph, a “Related Investor Action” means a private damages action brought against 

Defendant by or on behalf of one or more investors based on substantially the same facts as 

alleged in the Complaint in this action. 

IV. 

 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is 

 

incorporated herein with the same force and effect as if fully set forth herein, and that Defendant 

shall comply with all of the undertakings and agreements set forth therein, including, but not 

limited to, the undertakings to: 

(i) Within fourteen (14) days of the entry of the Final Judgment, Defendant shall 

deposit $15,000,000 (the Fair Fund) into an escrow account at a financial institution 

not unacceptable to the Commission staff and Defendant shall provide evidence of 

such deposit in a form acceptable to the Commission staff. By making this payment, 

Defendant relinquishes all legal and equitable right, title, and interest in such funds 

and no part of the funds shall be returned to Defendant. The account holding the 

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assets of the Fair Fund shall bear the name and the taxpayer identification number of 

the Fair Fund. If timely payment into the escrow account is not made, additional 

interest shall accrue pursuant to SEC Rule of Practice 600 [17 C.F.R. § 201.600] 

and/or 31 U.S.C. § 3717. 

(ii) Defendant shall be responsible for administering the Fair Fund and may hire a 

professional at its own cost to assist it in the administration of the distribution. The 

costs and expenses of administering the Fair Fund, including any such professional 

services, shall be borne by Defendant and shall not be paid out of the Fair Fund. 

(iii) Defendant shall distribute from the Fair Fund an amount based on the financial harm 

to current and former CIRA advisory clients between January 1, 2014 and December 

31, 2021, consisting of (a) the amount of excess fees paid by clients who purchased 

or held no-transaction fee mutual fund share classes that generated revenue sharing 

when a share class of the same fund was available to the client with a lower expense 

ratio; (b) the amount of reduced return for clients who purchased or held cash sweep 

money market funds that generated revenue sharing when a share class of the same 

fund, or a nearly identical fund, was available to the client with a higher return; and 

(c) the amount of excess fees paid by clients who were converted from a non- 

retirement, traditional non-wrap account to CIRA’s WealthPort Wrap program and 

incurred higher fees than they would have had they not been converted (collectively 

“Affected Advisory Clients”). The distribution will be made pursuant to a 

disbursement calculation (the “Calculation”) that will be submitted to, reviewed, and 

approved by the Commission staff in accordance with Section IV. To the extent the 

total amount of financial harm to Affected Advisory Clients exceeds the amount of 

Case 4:22-cv-00071-SMR-SBJ     Document 249     Filed 03/19/25     Page 5 of 10



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the Fair Fund, Defendant will calculate and distribute a pro rata percentage of the 

Fair Fund to each Affected Advisory Client based on the client’s pro rata financial 

harm during the period. The Calculation shall be subject to a de minimis threshold. 

No portion of the Fair Fund shall be paid to any account in which CIRA, Cambridge 

Investment Research, Inc., or any of their current or former officers or directors has 

a financial interest. 

(iv) Defendant shall, within ninety (90) days of the entry of the Final Judgment, submit 

the Calculation to the Commission staff for review and approval. At or around the 

time of submission of the proposed Calculation to the staff, Defendant shall make 

itself available, and shall require any third parties or professionals retained by 

Defendant to assist in formulating the methodology for its Calculation and/or 

administration of the distribution to be available for a conference call with the 

Commission staff to explain the methodology used in preparing the proposed 

Calculation and its implementation, and to provide the staff with an opportunity to 

ask questions. Defendant also shall provide the Commission staff such additional 

information and supporting documentation as the Commission staff may request for 

the purpose of its review. In the event of one or more objections by the Commission 

staff to Defendant’s proposed Calculation or any of its information or supporting 

documentation, Defendant shall submit a revised Calculation for the review and 

approval of the Commission staff or additional information or supporting 

documentation within ten (10) days of the date that the Commission staff notifies 

Defendant of the objection. The revised Calculation shall be subject to all of the 

provisions set forth in Section IV. 

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(v) Defendant shall, within thirty (30) days of the written approval of the Calculation by 

the Commission staff, submit a payment file (the “Payment File”) for review and 

acceptance by the Commission staff demonstrating the application of the 

methodology to each Affected Advisory Client. The Payment File should identify, 

at a minimum: (1) the name of each Affected Advisory Client; (2) the net amount of 

the payment to be made, less any tax withholding; (3) the amount of any de minimis 

threshold to be applied; and (4) the amount of reasonable interest paid, if applicable. 

Defendant shall exclude from the Payment File all payments to payees that appear 

on the U.S. Treasury Department Specially Designated Nationals List. 

(vi) Defendant shall, within thirty (30) days of the date the Commission staff approves 

the Payment File, notify Affected Advisory Clients of the settlement terms of the 

Final Judgment to each Affected Advisory Client via mail, email, or such other 

method not unacceptable to the Commission staff, together with a cover letter in a 

form not unacceptable to the Commission staff. 

(vii) Defendant shall disburse all amounts payable to Affected Advisory Clients within 

ninety (90) days of the date the Commission staff approves the Payment File. 

Defendant shall notify the Commission staff of the date[s] and the amounts paid in 

the distribution. 

(viii) If Defendant is unable to distribute or return any portion of the Fair Fund for any 

reason, including an inability to locate an Affected Advisory Client or a beneficial 

owner of an Affected Advisory Client’s account or any other factors beyond 

Defendant’s control, Defendant shall transfer any such undistributed funds to the 

Commission for transmittal to the United States Treasury subject to Section 

Case 4:22-cv-00071-SMR-SBJ     Document 249     Filed 03/19/25     Page 7 of 10



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21F(g)(3) of the Securities Exchange Act of 1934 once the distribution of funds is 

complete. Payment must be made in one of the following ways: 

(a) Defendant may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon request; 

(b) Defendant 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 

(c) Defendant 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: 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

(ix) Payments by check or money order must be accompanied by a cover letter 

identifying the payor as a Defendant 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 Jeffrey Shank, Assistant Regional Director, Securities and Exchange 

Commission, 175 West Jackson Boulevard, Suite 1450, Chicago, IL 60604. 

(x) A Fair Fund is a Qualified Settlement Fund (“QSF”) under Section 468B(g) of the 

Internal Revenue Code (“IRC”), 26 U.S.C. §§ 1.468B.1-1.468B.5. Defendant agrees 

to be responsible for all tax compliance responsibilities associated with the Fair 

Fund’s status as a QSF. These responsibilities involve reporting and paying 

requirements of the Fund, including but not limited to: (1) tax returns for the Fair 

Fund; (2) information return reporting regarding payments to Affected Advisory 

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Clients, as required by applicable codes and regulations; and (3) obligations 

resulting from compliance with the Foreign Account Tax Compliance Act. 

Defendant may retain any professional services necessary. The costs and expenses 

of tax compliance, including any such professional services, shall be borne by 

Defendant and shall not be paid out of the Fair Fund. 

(xi) Within one hundred fifty (150) days after Defendant completes the disbursement of 

all amounts payable to Affected Advisory Clients, Defendant shall return all 

undisbursed funds to the Commission pursuant to the instructions set forth in this 

Section IV. Defendant shall then submit to the Commission staff a final accounting 

and certification of the disposition of the Fair Fund for the Commission to submit for 

Court approval, which final accounting and certification shall include, but not be 

limited to: (1) the amount paid to each payee, with the reasonable interest amount, if 

any, reported separately; (2) the date of each payment; (3) the check number or other 

identifier of the money transferred; (4) the amount of any returned payment and the 

date received; (5) a description of the efforts to locate a prospective payee whose 

payment was returned or to whom payment was not made for any reason; (6) the 

total amount, if any, to be forwarded to the Commission, which will present the 

Court with a recommendation for disposition of the funds; and (7) an affirmation 

that Defendant has made payments from the Fair Fund to affected investors in 

accordance with the Calculation approved by the Commission staff. The final 

accounting and certification shall be submitted under a cover letter that identifies 

Defendant and the file number of these proceedings to Jeffrey Shank, Assistant 

Regional Director, Securities and Exchange Commission, 175 West Jackson 

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Boulevard, Suite 1450, Chicago, IL 60604. Defendant shall provide any and all 

supporting documentation for the accounting and certification to the Commission 

staff upon its request and shall cooperate with any additional requests by the 

Commission staff in connection with the accounting and certification. 

(xii) The Court may extend any of the procedural dates set forth in this Section IV for 

good cause shown. Deadlines for dates relating to the Fair Fund shall be counted in 

calendar days, except if the last day falls on a weekend or federal holiday, the next 

business day shall be considered the last day. 

VI. 

 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain 

jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. 

 

IT IS SO ORDERED. 

 Dated this 19th day of March, 2025. 

 

_________________________________ 

       STEPHANIE M. ROSE, CHIEF JUDGE 

       UNITED STATES DISTRICT COURT 

 

 

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