SEC Charges Matthew Bruderman, Bruderman Asset Management

The Securities and Exchange Commission (SEC) has settled charges against advisory firm Bruderman Asset Management and its principal Matthew Bruderman (CRD# 2210472), according to a press release issued on September 26, 2023. The charges concerned allegations that Mr. Bruderman and his firm failed to disclose “the misuse of proceeds raised from investment advisory clients” as well as the firm’s failure to execute reasonable policies and procedures governing the disclosure of conflicts of interest.

An order released by the SEC described the allegations further, alleging that Mr. Bruderman and the firm made recommendations to at least 13 clients that they invest at least $1.3 million “in three companies in which Mr. Bruderman had decision-making authority and significant ownership interests.” The alleged recommendations occurred between February 2017 and August 2021, according to the order. With respect to the three companies, Mr. Bruderman allegedly held a 20% interest in Company A; he held a five percent interest in Company B, with his wife and children holding the other 95%; and he held an 85% interest in Company C. He also served on the board of Company A and as the Board Chairman of Company B, per the order.

The SEC alleged that while Mr. Bruderman did not directly speak with the clients in question, he directed a firm advisor to recommend investments in the companies, and the adviser did so “on the basis of the information about the respective Bruderman Affiliated Company that he received from Bruderman and others and the conversations the [advisor] and Bruderman had.” It alleged additionally that the funds invested by clients were used to pay firm employees and to pay back outstanding loans owed to Mr. Bruderman or the affiliated companies, although neither the firm nor Mr. Bruderman represented to clients that their funds would be used thusly.

Neither the firm nor Mr. Bruderman admitted to or denied the SEC’s findings. They did, however, consent to a cease-and-desist order, as well as an order requiring them to jointly and severally pay a civil penalty of $250,000. In a statement regarding the settlement, SEC official Sheldon Pollock said: “Full disclosure of conflicts of interest is a central safeguard for investors who place their trust in investment advisers. Our program remains focused on ensuring that investment advisers make full and complete disclosures in order to increase investor confidence.”

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