D. Boulder Investment Advisers
In 2013, a disciplinary action was filed against a portfolio manager, Carl
Johns (“Johns”), employed at Boulder Investment Advisors, LLC (“BIA”),
for obstructing and misleading BIA’s CCO205 in an investigation for insider
trading.206 Johns concealed trades and changed documents, which goes
directly against Rule 38a- 1(c) of the Investment Company Act.207 This Rule
protects CCOs by making it illegal to mislead a CCO’s investigation.208 The
SEC ordered Johns to pay over $350,000 and stay out of the securities
industry for five years.209 Even though this rule came out in 2004, this is the
first case where it was cited by the SEC.
This case has many similarities to Cantone, where Smith misled Cantone
about his personal account by lying about the origins of the money and its
use.210 While Smith did not go as far as falsifying reports to Cantone, as was
seen by Johns in BIA, Smith did create a fictitious company and obviously
some sort of doctored paperwork to sell his nonexistent fund.211 Rule 38a-
1(c) protects a CCO from an employee who is directly or indirectly
misleading him or her.212 Smith was directly misleading Cantone213 in a very
similar way that Johns was misleading the CCO for BIA.214 I disagree with
the SEC that this Rule protected the CCO at BIA, but not the CCO at CRI.
E. Theodore W. Urban
In 2009, the SEC filed disciplinary action against Theodore Urban
(“Urban”).215 Urban was charged with violating Section 15(b) of the
Securities Exchange Act of 1934 and Section 203(f) of the Investment
Advisers Act of 1940.216 Unlike the other cases discussed, these charges were
205. In the Matter of Carl D. Johns, U.S. Sec. & Exch. Comm’n, Admin. Proc. File No.
3-15440, at 1–3 (Aug. 27, 2013), https://www.sec.gov/litigation/admin/2013/ia-3655.pdf
206. The CCO in Johns was unnamed. See id. at 1–5.
207. Id. at 4.
208. 17 C.F.R. § 270.38a- 1
209. Johns, supra note 205, at 4–5.
210. CRI, supra note 3, at 6.
211. Id. at 4–5.
212. 17 C.F.R. § 270.38a- 1.
213. CRI, supra note 3, at 6.
214. Johns, supra note 205, at 3.
215. In the Matter of Theodore W. Urban, U.S. Sec. & Exch. Comm’n, Admin. Proc. File
No. 3-13655, at 1 (Oct. 19, 2009), https://www.sec.gov/litigation/admin/2009/34-60837.pdf
[hereinafter Urban Order Instituting Administrative Proceedings].