A North Carolina- and Florida-based registered investment advisor who claimed assets under management of $16 million allegedly had only $53.95 in his fund’s account at times and defied a subpoena to produce his books, according to an SEC lawsuit filed yesterday.
In addition, George Kenneth Witherspoon, the sole owner, CEO, COO, CCO and president of Bóveda Asset Management, allegedly claimed to be a certified financial planner when he was not and that his firm had been audited by a certified public accounting firm in Fort Lauderdale when, in fact, Bóveda was never a client, the filing said.
Witherspoon could not be reached for comment by press time. While the Bóveda website implies the firm manages separate investments in real estate, private equity and hedge funds, only one fund, Bóveda Realty Investors, was associated with the firm, according to its Form ADV. The form further indicated the minimum investment was $1 million and the client demographics included individuals, high-net-worth individuals, other institutional and private funds or pools. In addition, while Bóveda listed five employees, none of them were reported to perform investment advisory functions, including research.
In its filing, the SEC requested civil penalties to be decided by the court and to restrain Witherspoon and Bóveda from further violations.
The SEC first asked to see the books and records of Bóveda Asset Management in September 2019 in an email to Witherspoon, according to the filing.
While Witherspoon allegedly confirmed receipt of the request and asked for more time to produce the documents, what followed over the next month was a back and forth in which he said he delegated the task to another person at his firm (a person the SEC later could not confirm existed), asked technical questions about the transfer of the documents (the instructions for which he had already been given) and said that some of the documents were forthcoming, the filing stated.
On October 11, 2019, Witherspoon then allegedly claimed that when he transferred the books and records using the SEC’s electronic platform, he received a notification saying his transfer “remains in the draft folder,” only the SEC could not verify this, the filing said.
“The exam staff did not receive any further communications from Witherspoon, or any books and records from Bóveda,” the SEC stated. “During September, October and November 2020, the commission’s enforcement staff made approximately six additional attempts to contact the defendants in an effort to obtain Bóveda’s books and records, without success.”
In January 2021, the SEC sent a subpoena for the production of the documents, which allegedly was ignored, and ultimately Bóveda was ordered to appear before the commission on May 14 of last year, the filing stated, adding that neither Bóveda nor Witherspoon appeared.
Further investigation into Bóveda led the SEC to believe that Witherspoon improperly registered the firm with the SEC as an internet investment advisor, which is defined as “a website in which computer software-based models of applications provide investment advice to clients based on personal information that each client provides through the website.”