On June 30, 2021, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Securities America Advisors, Inc. (“SAA” or the “Respondent”). In the Order, the Commission found that from November 2014 to March 2018, SAA failed to implement policies and procedures for the review of automatically generated surveillance alerts after client disbursements had occurred. SAA also failed to implement reasonably designed policies and procedures for reviewing client disbursement requests for possible misappropriation before the disbursements occurred. As a result of these failures, Hector May, the owner of an independent state-registered investment adviser whose clients participated in certain SAA advisory programs, misappropriated, without SAA’s detection, approximately $8 million from the SAA advisory accounts of at least fifteen SAA advisory clients. The Commission ordered the Respondent to pay a $1,750,000.00 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. IA-5762.

The Fair Fund includes the $1,750,000.00 paid by the Respondent. The Fair Fund and has been deposited in an interest-bearing account at the U.S. Department of the Treasury’s Bureau of the Fiscal Service, and any interest accrued will be added to the Fair Fund.

On October 18, 2021, the Commission appointed Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-93375.

On May 26, 2022, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The Proposed Plan proposes Catherine Pappas, a Commission employee, serve as the Fund Administrator to oversee the administration and distribution of the Fair Fund. The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-94995 and the Proposed Plan.

The Proposed Plan provides that the distribution of theFair Fund shall be made to those injured investors identified by Commission staff during and after its investigation of the underlying securities violation in accordance with the methodology detailed in the Proposed Plan.

Comments were received on the Proposed Plan during the comment period. On July 18, 2022, the Commission issued an order extending the time to enter an order to approve or disapprove the Proposed Plan to October 31, 2022 to allow for further evaluation and analysis to properly address the comments. See the Commission’s Order: Release No. 34-95311.

On November 22, 2022, the Commission published a notice of the proposed amended plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Amended Plan”). The Proposed Amended Plan proposes Catherine E. Pappas, a Commission employee, serve as the Fund Administrator to oversee the administration and distribution of the Fair Fund. The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-96379 and the Proposed Plan.

The Proposed Amended Plan provides that the distribution of the Fair Fund shall be made to those investors who held advisory accounts at the Respondent during the period November 1, 2014 through March 31, 2018, inclusive, and who suffered a loss from the misappropriation of funds. The Proposed Plan has been modified in response to comments received on the plan as originally proposed.

On January 23, 2023, the Commission issued an order approving the Proposed Amended Plan and simultaneously posted the approved amended plan of distribution (the “Amended Plan”).  See the Commission’s Order:  Release No. 34-96738 and the Amended Plan.  

On August 2, 2023, the Commission issued an order approving the disbursement of $744,695.00 from the Fair Fund for distribution to eligible investors. See the Commission’s Order: Release No. 34-98041.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov