SEC Charges Investment Adviser and Its Principal with Defrauding Client, False Advertising, and Other Violations of the Advisers Act

ADMINISTRATIVE PROCEEDING
File No. 3-20607

September 28, 2021 - The Securities and Exchange Commission announced today that Soteira Capital, LLC, formerly a Commission-registered investment adviser based in Orange County, California, and Derek Clark, its principal, have been charged with fraud and violating other provisions of the Investment Advisers Act of 1940. Laura Santos, Soteira's chief compliance officer, was also charged for her role in certain violations of the Advisers Act. The respondents agreed to a settlements that included $165,000 in penalties and associational bars against the individuals.

According to the SEC's order, Soteira and Clark violated the Advisers Act's antifraud provisions by overstating a client's returns by $2.2 million, thereby collecting $340,231 in excessive performance fees, and by issuing false and misleading advertising concerning Soteira's investment performance and managed assets. The order also found that Soteira and Clark willfully made false and misleading statements in Soteira's filings regarding Soteira's eligibility to register with the Commission, regulatory assets under management, and financial condition. In addition, the order found that Soteira, aided and abetted by Clark, violated the Advisers Act by improperly registering Soteira as an investment adviser with the Commission, having custody of a client's assets without having the assets subject to an annual audit or surprise examination, failing to have an appropriate compliance program, and failing to make and keep true and accurate records necessary to form the basis for the calculation of the performance of any managed accounts in any advertisement. Finally, the order found that Santos willfully made misleading statements in Soteira's brochure regarding Soteira's financial condition and aided and abetted Soteira's improper registration with the Commission and failure to have an appropriate compliance program.

The order finds that Soteira and Clark violated Advisers Act Sections 206(1), 206(2), and 207; Soteira, aided and abetted by Clark, violated Advisers Act Sections 203A, 204, and 206(4) and Rules 203A-1(a)(1), 204-2(a)(16), 206(4)-1(a)(5), 206(4)-2, and 206(4)-7; and Santos violated Advisers Act Section 207 and aided and abetted Soteira's violations of Advisers Act Sections 203A and 206(4) and Rules 203A-1 and 206(4)-7. The respondents settled without admitting or denying the SEC's findings. All respondents agreed to cease-and-desist orders. Soteira agreed to a censure, and Soteira and Clark agreed to pay, jointly and severally, disgorgement and prejudgment interest totaling $402,005. Clark also agreed to an associational bar with a right to reapply in five years and to pay a $150,000 penalty. Santos agreed to an associational bar with a right to reapply in one year and to pay a $15,000 penalty.