State Seeks To Deny Registration For Westborough Firm
Westborough-based CCR Wealth Management’s ability to do business as an investment adviser could be in jeopardy after state regulators alleged it made false or misleading statements about the size of its assets under management.
Secretary of State William Galvin’s office has charged that CCR misrepresented its asset size in order to avoid falling under state regulation.
Formerly regulated by the federal Securities and Exchange Commission (SEC) for more than 10 years, CCR and 195 other firms were required to register with Massachusetts regulators because of the Dodd Frank Act of 2010.
Prior to the act, advisers with $25 million or more under management were regulated by the SEC, but the new minimum is $100 million.
Galvin’s office said inspectors became suspicious when they noticed that CCR had reported static denominations over a period of time, even as its number of accounts fluctuated. Between 2007 and 2011, CCR reported exactly $25 million under management, even as its number of accounts fell from 350 to 250, according to the complaint.
The amounts appeared to line up exactly with the minimum asset amounts required to remain under SEC regulation.
“They were designing it to keep $25 million in assets under management,” said Brian McNiff, a spokesman for Galvin.
The complaint claims CCR told state inspectors that they had included accounts in their asset calculations that were managed by broker-dealer agents, and that in reality, the firm had “very little business” under its registered investment adviser business. Including those broker-dealer assets is against the law, McNiff said.
CCR issued a statement this morning that said: “CCR Wealth Management is a leading independent financial management and advisory firm. We take our reporting and registration requirements very seriously, and will work closely with the Massachusetts Securities Division to clarify any misunderstanding that may exist. We look forward to resolving this matter in a constructive way.”
Asked why a firm would want to avoid falling under state regulation, McNiff said he could not speak for CCR, but said: “The SEC is national, whereas our jurisdiction is Massachusetts, so we tend to pay a little bit more attention.”
A report issued by the SEC in 2011, and mandated by Dodd Frank, found that examinations of investment advisers fell sharply from 2004 to 2010. Only 9 percent of investment advisers were examined in 2010, down from 18 percent in 2004. That means the average adviser could expect to be examined less than once every 11 years. The SEC attributed the decline to the growth in the number of advisers as well as a decline in examination staff.
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