The following article was written by Doug Cornelius on his ComplianceBuilding.com web site. A short description of the related SEC Litigation Release, with its link, follows the blog. 

If your marketing materials say that you have “never, not once, taken even so much as a nickel” from potential referrals, you have to put that policy in place and enforce it. Jeffery Slocum & Associates told is clients this. Then some of its employees accepted golf tickets. The SEC is pretty sure that tickets to the Masters Golf Tournament are worth more than a nickel.

This was a self-inflicted mistake.  [emphasis by financialish.com]

Jeffery Slocum & Associates provided investment counseling services to institutional clients including recommending investment managers. It wanted to avoid taking gifts from those possible investment managers to avoid an appearance of favoring one over the based on anything but performance.

As part of its advertising, Jeffery Slocum & Associates proclaimed that it had “never, not once, taken even so much as a nickel from an investment manager.” The problem was that the statement wasn’t true.

Slocum’s gift policy only prohibited gifts in excess of $100. In practice, employees could get waivers of that $100 limit.

Slocum’s CCO discovered that four employees had accepted tickets to the Masters from an investment manager. The proposed response was to repay the value of the tickets to the investment manager. The head of the firm stepped in and waived off that requirement.

So even though Slocum had adopted a written policy regarding the acceptance of gifts, this policy, as written and as implemented, conflicted with representations contained in Slocum’s marketing materials.

SEC Order against Jeffery Slocum and Jeffery Slocum & Associates

JSA and Slocum agreed to pay civil penalties - $300K and $100K, respectively -  to settle SEC charges that, for nearly 4 years, JSA disseminated marketing materials containing representations that JSA had “never, not once, taken even so much as a nickel from an investment manager,” even though JSA’s gift policy permitted the acceptance of gifts from investment managers under certain circumstances (under $100 was permissible).

In addition, certain JSA employees accepted tickets to the Masters Golf Tournament in 2012 and 2013. The 2013 Masters trip was in violation of JSA’s gift policy. JSA Management passed on having the employees repay the difference. [The SEC Order noted other alleged violations.]