The Securities and Exchange Commission (SEC) today filed charges against Connecticut-based Dolphin Associates III, LLC, and its principal, Donald T. Netter.
The SEC’s complaint charges Dolphin and Netter with improperly withholding withdrawals from a private fund that they managed, charging the fund with excessive fees, and making materially misleading statements to investors.
According to the SEC’s complaint, filed in the United States District Court for the District of Connecticut, since November 2016, Dolphin and Netter have improperly barred withdrawals from the Fund while causing the Fund to make long-term investments in various small-cap equities that Netter also owned himself.
The complaint further alleges that, Dolphin and Netter charged the Fund excessive fees, failed to obtain annual audits and distribute financial reports as required by the Fund’s organizational documents, and made materially misleading statements to investors regarding the liquidity of the Fund’s portfolio and Dolphin and Netter’s efforts to return money to investors.
The SEC’s complaint charges Dolphin and Netter with violating the antifraud provisions of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.
The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from Dolphin and Netter.
