The Securities and Exchange Commission has filed serious charges against Sisu Capital, LLC, and Timothy Overturf, the owner, for failure to meet their fiduciary duties towards clients. This news was shocking to the financial world on August 1, 2023. What does this mean for clients and the company? Let’s get to the bottom of this.
Allegations
The SEC has accused Timothy Overturf of trading unsuitable accounts and using unauthorized methods for his clients from December 2017, until at least 20 May 2021. These charges do not stop there. Hansueli Overturf has also been charged by the SEC. “Hans” Overturf was found guilty of assisting and aiding in the violations. Doesn’t it look like something out of a thriller financial?
The Failures
Overturf’s company and he are accused of multiple failures by the SEC. Hans Overturf continued to give investment advice to Sisu Capital’s clients despite his suspension from providing investment advisory service in California. It’s impossible to imagine giving your money to someone who has had their financial advice suspended.
Sisu Capital and Hans allegedly acted in the clients’ best interest by investing client funds into a thinly traded bank stock. The SEC says that the investment was part of a secret Sisu Capital plan to accumulate enough shares among their clients and themselves to allow Timothy to propose business partnership ideas to banks. The game plays out like chess except that the stakes are client’s money.
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Hans advised clients and Timothy bought a complicated financial product designed for a short-term purpose, which Sisu Capital customers held for several month. According to SEC records, Sisu Capital has earned more than $2,000,000 in fees for advisory services and other compensation. Isn’t it a classic instance of the fox protecting his henhouse?
Charges
In its complaint, filed before a federal court in San Francisco, the SEC accused Sisu Capital, of violating Sections 206.1.1 and 206.2(2) Investment Advisers Act of 1940. Hans Overturf is also accused of aiding and abetting these violations. The complaint is seeking permanent injunctions and disgorgement, with prejudgment-interest, as well civil penalties.
The Investigation
Alice Liu Jensen, SEC investigator, was overseen and supervised by Rahul Kalhatkar (chief of Enforcement Division Market Abuse Unit) and Joseph Sansone. Jensen, who will be leading SEC litigation with John Han in the San Francisco Regional Office, will take charge of SEC litigation. The plot continues and everyone in financial world is eagerly waiting for the final result.
