FlowPoint Partners, LLC and Peter J. DeCaprio
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26080 / August 21, 2024
Securities and Exchange Commission v. FlowPoint Partners, LLC and Peter J. DeCaprio, No. 1:24-cv-12144 (D. Mass. filed Aug. 21, 2024)
SEC Charges Investment Adviser and Principal with Making Misleading Statements to Investors and Breaching Fiduciary Duties to Private Funds
The Securities and Exchange Commission today announced charges against FlowPoint Partners, LLC, and its principal, Peter J. DeCaprio, for allegedly making materially misleading statements to investors about an important safeguard for four private funds that they managed and advised (the “Funds”). FlowPoint is currently headquartered in Fort Lauderdale, Florida, and was previously headquartered in Boston, Massachusetts. The parties have agreed to settle the action by, among other things, paying a total of $290,000 in penalties.
According to the complaint, during the period from about July 2020 through late 2023, FlowPoint and DeCaprio misrepresented to investors that the Funds were audited annually by an independent auditor. Although they engaged an auditor to audit two of the four Funds, that auditor did not produce any audit reports. The complaint alleges that FlowPoint and DeCaprio did not correct their ongoing misstatements to investors despite knowing that the Funds were not actually audited by the auditor they had engaged. FlowPoint and DeCaprio also allegedly breached their fiduciary duty to two of the Funds they advised by failing to obtain annual audits for those two Funds, as those Funds’ organizational documents required. By failing to operate those Funds as they were required to be operated, Defendants allegedly failed in their duty as investment advisers to those Funds and operated a fraud on the Funds.
The SEC’s complaint alleges that FlowPoint and DeCaprio violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-8 thereunder. The complaint also alleges that FlowPoint violated 204A of the Advisers Act for failing to establish, maintain, and enforce written policies and procedures designed to prevent the misuse of material nonpublic information, and that DeCaprio aided and abetted that violation.
Without admitting or denying the allegations in the complaint, FlowPoint and DeCaprio have agreed to settle the Commission’s charges by consenting to the entry of final judgments that: permanently enjoin them from committing future violations of the charged provisions and, as to DeCaprio, from aiding and abetting future violations of Section 204A of the Advisers Act; order FlowPoint and DeCaprio each to pay a $145,000 civil penalty; order FlowPoint to review and correct as necessary all disclosure documents concerning audits of the Funds it advises; and bar DeCaprio from serving as an officer or director of certain public companies for three years. The settlements are subject to court approval.
The SEC’s case was handled by William J. Durkin, Dahlia Rin, Kathleen Shields, Brandon Sisson, Kerry Vasta, Samantha McGregor, Patrick Noone, and Kevin B. Currid of the Division of Enforcement, with assistance from Andrea Cloutier, Paul D’Amico, Kara Maney, Michael O’Connell, and Raymond Tan of the Division of Examinations, all from the SEC’s Boston Regional Office.