On March 29, 2017, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (“Order”) against Covenant Financial Services, LLC (“Covenant”) and Stephen Shafer (collectively, the “Respondents”). The Commission found that, from mid-August 2011 through the first quarter of 2013, the Respondents violated federal securities laws by materially misstating the values of assets in five private funds, resulting in the funds paying Covenant excessive management fees and incorrectly calculating redemptions from the funds. The Commission ordered the Respondents to pay a total of $144,845.78 in prejudgment interest and civil money penalties. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalties, along with the prejudgment interest, paid can be distributed to those harmed by the Respondents’ misconduct described in the Order. 

The Order provides for the Respondents to deposit the Fair Fund, pursuant to a payment plan detailed in the Order, with the final payment due by January 23, 2018, into an escrow account, acceptable to the Commission staff. The Respondents are responsible for distributing the Fair Fund in accordance with the Order. Tax compliance and any related administrative expenses are the responsibility of the Respondents. The Order requires that the Respondents submit to the Commission staff a final accounting and certification of the disposition of the Fair Fund within 365 days of the Order. See the Commission’s order:  Release No. IA-4672. 

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov