The Securities and Exchange Commission sanctioned a former portfolio manager at investment firm Boulder Investment Advisers for forging documents and misleading the firm's chief compliance officer to conceal his failure to report personal trades.

An SEC investigation found that Carl Johns failed to report several hundred securities trades in his personal accounts as required under the federal securities laws and the code of ethics at BIA. Johns concealed the trades in quarterly and annual trading reports that he submitted to BIA by altering brokerage statements and other documents that he attached to those reports. He later tried to conceal his misconduct by creating false pre-trade approvals, and misled the firm's chief compliance officer in her investigation into his improper trading.

Johns agreed to pay more than $350,000 and be barred from the securities industry for at least five years to settle the SEC's charges.

“Securities industry professionals have an obligation to adhere to compliance policies, and they certainly must not interfere with the chief compliance officers who enforce those policies,” said Julie Lutz, acting co-director of the SEC's Denver Regional Office in a statement.  “Johns set out to cover up his compliance failures by creating false documents and misleading his firm's CCO.”

BIA's code of ethics contained restrictions on when and how Johns could trade in securities, and required his transactions to be pre-cleared by the firm's chief compliance officer.  From 2006 to 2010, Johns failed to pre-clear or report approximately 640 trades, including at least 91 trades involving securities held or acquired by the funds managed by the firm. The code of ethics restricted trading in securities that the funds were buying or selling.

According to the SEC's order, Johns submitted inaccurate quarterly and annual reports and falsely certified his annual compliance with the code of ethics. Johns physically altered brokerage statements, trade confirmations, and pre-clearance approvals before submitting them to the firm along with these reports.  For example, he manually deleted securities holdings listed on his brokerage statements before submitting them in order to avoid disclosing securities purchases that were not pre-cleared. 

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