The former chief compliance officer of a New York City investment firm who impeded a Securities and Exchange Commission investigation into her employer has been fined $25,000 and suspended from practicing before the SEC for a year.
Meredith Simmons, an attorney employed as the CCO for the unnamed firm from April 2014 to June 2018, withheld documents requested by investigators, the SEC said. Documents she did provide contained altered dates and inaccurate information, according to the agency’s complaint filed Wednesday.
Simmons has agreed to pay the fine to settle the charges. She will be censured and suspended from appearing before the SEC as an attorney, representing clients in SEC matters, and from advising clients about SEC filing obligations for at least a year. She will be barred for three years from acting in a compliance capacity with any broker, dealer, investment advisor, mutual securities dealer, municipal advisor, transfer agent, or statistical rating organization.
Simmons allegedly impeded an SEC investigation into the firm’s investment into a company that was being purchased and about a decision she made regarding insider information an analyst at the firm may have received before the sale closed.
“Simmons’s actions delayed and impeded the Commission staff’s inquiry into the October 2016 Investment,” the SEC complaint said. “By her actions, Simmons willfully aided and abetted and was a cause of Adviser A’s violations” of the Investment Advisors Act.
In October 2016, the firm recommended its clients invest in a company that was about to be purchased by another company.
While the sale was being completed, an analyst at the firm may have obtained “material nonpublic information” relevant to the sale through a conversation with a friend. Simmons conducted an evaluation, determined the analyst had not been exposed to inside information, and cleared the analyst to continue work on the firm’s investment into the company being purchased, the SEC said.
At the time, Simmons’s supervisor asked her to create several compliance memorandums regarding the sale and her evaluation of the potential exposure to insider information and other relevant information in anticipation of a possible investigation by the SEC. The supervisor had good reason to expect regulatory scrutiny, the SEC said, as the firm “had been examined by the Commission twice in the preceding four years and received two deficiency letters as a result of those examinations.”
Instead of creating a compliance memorandum regarding her conversation with the analyst and other information relevant to the sale, Simmons instead “created and saved a blank ‘memo to file’ concerning the October 2016 Investment that contained only the subject and a date ‘10-21-16,’ but had no content. She did not substantively document either her evaluation or any other events related to the October 2016 Investment at that time,” the SEC said.
The SEC launched an investigation in 2017 into the firm’s investment in the company being purchased, which included an examination of potential insider trading. Investigators asked for all compliance memorandums on the investment.
According to the SEC, when the firm asked Simmons for compliance memorandums related to the 2016 investment, she created two new documents, which she backdated to the time of the 2016 investment. Contained in those backdated documents were “multiple factual inaccuracies,” the SEC said. She then claimed she created those documents in 2016.
Then, Simmons only handed over one of the two documents she created to investigators, although investigators asked for all documents related to the firm’s 2016 investment, the SEC said.
Editor’s note: This story has been updated to change uses of the word “barred” to “suspended” to better reflect the SEC’s terminology.