On June 6, 2022, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Kahn Brothers Advisors, LLC ("KIA"), a registered investment adviser, and Thomas Kahn ("Kahn"), its principal owner and president (collectively, the “Respondents”). In the Order, the Commission found that the Respondents violated the federal securities laws when they made misstatements and omissions to KIA advisory clients and prospective clients relating to brokerage services provided by KIA's affiliated broker-dealer, Kahn Brothers LLC ("KBD"). According to the Order, KIA and Kahn also failed to seek best execution for advisory clients, failed to conduct a best execution review of KBD, and failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act of 1940 and the rules promulgated thereunder. According to KIA's policies and procedures, Kahn was responsible for all aspects of KIA's compliance program and its implementation, as well as the firms' disclosure obligations. The Commission ordered the Respondents to pay $701,799.00 in disgorgement, $146,100.00 in prejudgment interest, and a $250,000.00 civil money penalty, for a total of $1,097,899.00, 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, along with the disgorgement and interest paid, can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 34-95045.

The Fair Fund includes the $1,097,899.00 paid by the Respondents. 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 December 1, 2022, the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-96434.

On August 14, 2023, 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 Sondra Panahi, 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. 34-98119 and the Proposed Plan.

The Proposed Plan provides that the distribution of the Fair Fund shall be made to those investors who were harmed by the Respondents’ conduct described in the Order and suffered losses resulting from excess commissions paid for brokerage services provided by KIA's affiliated broker-dealer, KBD, from March 1, 2015 through March 31, 2020, inclusive, due to the Respondents’ failure to direct KBD to aggregate their advisory clients’ transactions.

On October 10, 2023, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-98714 and the approved Plan.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov