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Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 1 of 191 ERIN E. SCHNEIDER (Cal. Bar No. 216114)MONIQUE WINKLER (Cal. Bar No. 213031)2 [email protected] O’CALLAGHAN (Cal. Bar No. 131032)3 ocallaghans@@sec.govBERNARD B. SMYTH (Cal. Bar No. 217741)4 [email protected] S. KIM (Cal. Bar No. 298658)5 [email protected] Attorneys for PlaintiffSECURITIES AND EXCHANGE COMMISSION7 44 Montgomery Street, Suite 2800San Francisco, California 941048 Telephone: (415) 705-2500Facsimile: (415) 705-250191011UNITED STATES DISTRICT COURT12EASTERN DISTRICT OF CALIFORNIA13SACRAMENTO DIVISION1415 SECURITIES AND EXCHANGE COMMISSION,1617Plaintiff,COMPLAINTv.18 KEITH SPRINGER andSPRINGER INVESTMENT MANAGEMENT,19 INC. DBA SPRINGER FINANCIAL ADVISORS,20Case No.Defendants.2122232425262728COMPLAINTSEC V. KEITH SPRINGER, ET AL.JURY TRIAL DEMAND
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 2 of 191Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”) alleges the2 following against Keith Springer and Springer Investment Management, Inc. dba Springer3 Financial Advisors:45JURISDICTION AND VENUE1.The Commission brings this action pursuant to Sections 209(d) and 209(e) of the6 Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-9(d), 80b-9(e)].72.This Court has jurisdiction over this action pursuant to Sections 209(d), 209(e),8 and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), 80b-14].93.Venue in this District is proper pursuant to 28 U.S.C. § 1391 and intradistrict10 assignment to the Sacramento Division is proper pursuant to Rule 120(d) of the Court’s Local11 Rules because a substantial part of the acts and transactions constituting the violations alleged in12 this Complaint occurred in Sacramento County, and Defendant Springer resides in Sacramento.1314SUMMARY OF THE ACTION4.Since at least January 2014, Springer and the investment adviser firm he controls,15 Springer Investment Management, Inc. dba Springer Financial Advisors (“SFA”), which is16 registered with the SEC, have engaged in a pattern of deceptive conduct specifically targeted at17 retirees and near-retirees, including making false and misleading representations to clients and18 prospective clients and breaching the fiduciary duty they owed to their clients.195.Springer and SFA solicited retirees and near-retirees through advertisements20 containing false and misleading claims about Defendants’ compensation, conflicts of interest,21 and Springer’s purportedly vetted expertise. Springer and SFA also concealed from prospective22 clients their prior disciplinary history with the SEC and Springer’s prior disciplinary history with23 the New York Stock Exchange (“NYSE”).246.Defendants’ deceptive conduct continued after clients retained SFA. In25 particular, Springer and SFA recommended to clients, or directed client funds into, certain26 investments in order to obtain payment of millions of dollars in compensation and the provision27 of other economic benefits for themselves without disclosing those incentives to their clients.28COMPLAINTSEC V. KEITH SPRINGER, ET AL.1
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 3 of 1917.As a result of their fraudulent conduct and breaches of fiduciary duty to their2 advisory clients, Defendants have violated and will continue to violate the federal securities3 laws. The Commission therefore seeks an order enjoining Defendants from further violations of4 the federal securities laws, ordering Defendants to pay disgorgement of any ill-gotten gains plus5 prejudgment interest, and civil monetary penalties, and providing for other equitable and related6 relief as may be appropriate.78DEFENDANTS8.Keith Springer, age 55, is a resident of Sacramento, California. Springer is the9 President and sole owner of SFA, and at all times owned, managed, and controlled SFA.10 Springer founded SFA, holds himself out as an investment adviser, provides investment11 management advice to SFA’s clients, and is compensated for his services. From April 201612 through April 2018, Springer was also the Chief Compliance Officer of SFA. Springer holds a13 Series 65 securities license and a California insurance license.149.Springer Investment Management, Inc. dba Springer Financial Advisors is15 an investment adviser incorporated in California and headquartered in Sacramento. SFA has16 been registered with the SEC since February 2000. SFA primarily markets its advisory services17 to retirees and near-retirees. As of July 2019, SFA reported having discretionary assets under18 management of 207 million across 513 accounts, mostly owned by individual retail investors.1920FACTUAL ALLEGATIONSA.Defendants Solicit Retiree and Near-Retiree Clients with False andMisleading Advertisements10.From at least January 2014 to the present (the “Relevant Period”), Defendants212223 solicited retirees and near retirees (the majority of whom were unsophisticated retail investors24 over 55) through the use of deceptive marketing, including: (i) distributing advertisements that25 inflated or misstated Springer’s purportedly vetted expertise and prominence in the industry; (ii)26 distributing advertisements that misstated the resources Defendants dedicated to managing client27 accounts; (iii) distributing advertisements that falsely claimed Defendants did not receive28COMPLAINTSEC V. KEITH SPRINGER, ET AL.2
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 4 of 191 incentives to recommend or direct client funds into particular investments; and (iv) engaging in2 efforts to conceal Defendants’ prior disciplinary history from clients and prospective clients.311.Many clients learned about Springer and SFA through a radio show hosted by4 Springer, called “Smart Money with Keith Springer,” which was broadcast on a local radio5 station in the greater Sacramento area. SFA advertised in its marketing materials (including but6 not limited to its website, social media pages, direct mail, and newsletters) that Springer hosted7 the radio show and Springer told clients and prospective clients that he had been selected to host8 the show due to his expertise. Defendants did not disclose in these marketing materials,9 however, that SFA paid to host and broadcast the show.1012.SFA distributed advertisements to appear as paid sponsored content on websites11 such as Forbes.com and Money.com. The advertisements were in the form of articles written by12 Springer.1313.Although SFA’s materials appeared on these websites as paid advertisements,14 Springer directed SFA employees to create versions of the articles that said “Published” at the15 top with the Forbes or Money logo to make the content appear to have been published work16 other than advertisements. Springer distributed, or directed SFA employees to distribute, these17 versions to clients and prospective clients at SFA’s office.1814.Springer also directed SFA employees to distribute the altered materials to clients19 and prospective clients through marketing materials (including but not limited to its website and20 newsletters) alongside false claims such as “Keith was recently asked by Forbes to write an21 article on successful retirement planning” which “was just published by the magazine.”2215.Defendants made false claims about Springer’s expertise in retirement planning.23 For example, both in Springer’s radio show and in materials SFA paid to have appear as24 sponsored content on websites, Defendants claimed that Springer held a special designation in25 retirement planning, describing Springer as a “Qualified Retirement Advisor.” However, there is26 no license or special qualification for managing retirement assets, and Springer did not possess27 such a designation.28COMPLAINTSEC V. KEITH SPRINGER, ET AL.3
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 5 of 19116.Defendants’ advertisements made false claims about the amount of money SFA2 spent on managing client accounts. For example, Springer claimed in his radio show that SFA3 spent “hundreds of thousands of dollars a year” or “tens of thousands of dollars a year” on4 research, software, and portfolio monitoring. In truth, the only such service SFA spent money5 on was a 3,000 a year Morningstar subscription, which was fully reimbursed by a third party.617.In their marketing materials (including but not limited to SFA’s website, social7 media pages, and articles written by Springer and distributed by SFA), Defendants falsely8 claimed that they did not have conflicts of interest in making investment recommendations to9 their clients. For example, SFA’s website claimed that Defendants would “never receive any10 incentives to use an investment in our client portfolios.” In reality, as described in Section B11 below, Defendants had numerous undisclosed compensation arrangements that incentivized them12 to recommend, and direct client funds into, certain investments.1318.Springer directed the inclusion of these claims in SFA’s advertisements and14 instructed SFA employees to distribute the advertisements to clients and prospective clients.15 During the Relevant Period, Springer also made these misleading claims himself on his radio16 shows and in meetings with clients and prospective clients.1719.Defendants knew, or were reckless in not knowing, that the claims made in their18 advertisements were false or misleading.1920.In addition to the false and misleading claims Defendants made in soliciting20 clients, Defendants acted to conceal their disciplinary history from prospective clients. In 1999,21 the NYSE, as part of a disciplinary action that was later upheld by the SEC, censured Springer22 and barred him for four years from membership for certain improper conduct that benefited him23 personally to the detriment of his clients.2421.In 2005, as part of a separate action, the SEC entered a cease-and-desist order and25 obtained additional relief against Defendants based on misrepresentations Defendants made26 regarding the performance of a private hedge fund they managed and for SFA’s failure to27 adequately disclose the NYSE disciplinary action against Springer.28COMPLAINTSEC V. KEITH SPRINGER, ET AL.4
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 6 of 19122.During the Relevant Period, Defendants acted to hide this disciplinary history2 from prospective clients. SFA was required by SEC regulation to deliver a copy of a disclosure3 brochure (Form ADV Part 2) that contained Defendants’ disciplinary history to prospective4 clients at or before the time they became new clients. However, at Springer’s direction,5 prospective clients were either not provided with that disclosure or it was made available to them6 only after they had retained Defendants as their investment adviser.723.SFA also spent tens of thousands of dollars on multiple internet search8 suppression consultants with the goal of ensuring that the SEC’s 2005 Order against Defendants9 would not be obvious when performing an internet search for their names. For instance,10 Springer instructed the consultants to use “all resources” to ensure that the SEC’s 2005 Order11 would not appear on the first page of results when someone conducted a “Google search” for12 Springer and SFA.13B.Defendants Breached Their Fiduciary Duty to Their Clients1424.As investment advisers, Defendants have a fiduciary duty to their advisory15 clients. As such, Defendants owe their clients an affirmative duty of utmost good faith, must16 provide full and fair disclosure of all material facts, and have an obligation to employ reasonable17 care to avoid misleading their clients. Defendants’ duty to disclose all material facts includes a18 duty to tell clients about conflicts of interest that might incline Defendants to render investment19 advice that is not disinterested.2025.Defendants breached their fiduciary duty to their clients by failing to disclose21 compensation arrangements that incentivized Defendants to recommend and direct client funds22 into certain investments. Defendants failed to disclose conflicts of interest related to23 compensation arrangements concerning (i) annuities purchases; (ii) use of a third party asset24 manager for advisory services; and (iii) the placement of clients in certain portfolios managed by25 the third party asset manager.2626.Defendants knew, or were reckless in not knowing, that these compensation27 arrangements created conflicts of interest, and knew, or were reckless in not knowing, that this28 information was not disclosed to clients and prospective clients.COMPLAINTSEC V. KEITH SPRINGER, ET AL.5
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 7 of 1911.2327.Defendants Failed to Disclose Conflicts of Interest Related toAnnuities PurchasesDefendants placed their advisory clients into investments in fixed indexed4 annuities, including recommending that clients sell securities in existing retirement accounts to5 fund an annuity, or to sell an existing annuity (and pay the associated surrender fee) to fund a6 new annuity. Defendants failed to disclose to clients that Defendants had compensation7 arrangements that provided them with far more money and other benefits for directing clients8 into annuities than what Defendants would have received had they recommended other9 investments.1028.SFA’s standard asset-based management fee was typically 1% to 2% of a client’s11 assets under management. In contrast to its asset-based management fee, SFA received up-front12 commissions for selling annuities, typically ranging from 5% to 7% of the product’s total value,13 as well as trailing commissions from the insurance companies that issued the annuities. SFA14 also received bonus payments from insurance companies for selling a certain target number of15 their annuities within a given period.1629.From January 2014 through April 2019, Defendants received at least 6 million in17 annuity commissions and bonus payments from the sale of annuities to its advisory clients.18 Neither Springer nor SFA disclosed this to their advisory clients.1930.Defendants also received additional undisclosed benefits for the sale of annuities20 from an insurance marketing organization. For example, Defendants received, among other21 things, free sales and operations support, free marketing services, paid incentive trips, and tickets22 to concerts and sporting events. The benefits were tiered such that the more annuities that23 Defendants sold, the more benefits Defendants received. Neither Springer nor SFA disclosed the24 receipt of these benefits to their advisory clients.252.262731.Defendants Failed to Disclose Conflicts of Interest Related to Use of aThird Party Asset Manager for Advisory ServicesIn or around July 2014, SFA entered into an agreement with a registered28 investment adviser that offered asset management services to other investment advisers (theCOMPLAINTSEC V. KEITH SPRINGER, ET AL.6
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 8 of 191 “Third Party Asset Manager”). Pursuant to that agreement, SFA arranged for nearly all of its2 new and existing clients to have most of their assets managed by Third Party Asset Manager.3 Third Party Asset Manager took over portfolio management responsibility for these assets,4 including the recommendation of an appropriate portfolio for each client based on a5 questionnaire the client filled out, while SFA continued to serve as the client’s primary6 investment adviser and had responsibility to monitor each client’s account and to meet regularly7 with each client to advise on whether the selected portfolio was aligned with the particular8 client’s goals and risk tolerance.932.For assets managed by Third Party Asset Manager, SFA and its clients agreed to a10 flat fee structure where clients were charged a fee equal to a set percentage of their assets under11 management. The total flat fee was to include both SFA’s fee and Third Party Asset Manager’s12 fee.1333.In addition to its portion of the flat fee charged to clients, SFA had arrangements14 to receive a number of benefits from Third Party Asset Manager that incentivized Defendants to15 have clients use Third Party Asset Manager’s services. Defendants failed to disclose those16 conflicts of interest to their clients.1734.For example, SFA received free marketing and website design services,18 reimbursements for its Morningstar subscription, and a free customer relationship management19 software subscription from Third Party Asset Manager. Since August 2017 through the present,20 Third Party Asset Manager has also provided SFA with 1,500 a month in compensation for21 continuing its relationship with Third Party Asset Manager. Neither Springer nor SFA disclosed22 any of these benefits to their advisory clients.233.242535.Defendants Placed Their Own Interests Above Those of Their ClientsIn Directing the Selection of Investment PortfoliosDefendants’ fee arrangement with Third Party Asset Manager also created an26 incentive for Defendants to place client funds into a particular investment portfolio. Defendants27 put their own interests first and proceeded to direct clients into the portfolio that provided28 Defendants with the highest compensation.COMPLAINTSEC V. KEITH SPRINGER, ET AL.7
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 9 of 19136.The amount of Third Party Asset Manager’s fee depended on the client’s selected2 portfolio, with Third Party Asset Manager charging higher fees for some portfolios than others.3 Pursuant to this fee structure, SFA’s fee equaled the difference between the total flat fee SFA4 charged its clients and the Third Party Asset Manager’s fee. Therefore, SFA received higher5 fees by recommending investments for which Third Party Asset Manager charged less.637.In or around August 2017, Springer negotiated with Third Party Asset Manager to7 set Third Party Asset Manager’s fees at either 0.35%, 0.40%, or 0.45%, depending on the8 portfolio in which client assets were invested. In or around that same month, Springer directed9 Third Party Asset Manager to move every single one of SFA’s clients into the portfolio that10 provided Third Party Asset Manager a fee of 0.35%, which resulted in higher fees for SFA.1138.Springer made this change irrespective of which portfolio Third Party Asset12 Manager had recommended for the client based on the client’s stated goals and risk tolerance.13 Springer also told Third Party Asset Manager that the savings from the selection of a lower-fee14 portfolio should be sent to SFA, not to SFA’s clients.1539.On or about August 31, 2017, Third Party Asset Manager told Springer that the16 clients that were moved into the lower-fee portfolio should receive the benefit of the lower fees.17 Springer rejected that suggestion and responded to Third Party Asset Manager in an email that18 same day that “we are keeping the difference.” Springer also instructed Third Party Asset19 Manager not to communicate with the clients about this change.20C.Defendants Made Material Misrepresentations and Omissions in FormsADV Filed with the SEC40.As an investment adviser registered with the SEC, SFA is required to execute and212223 keep current an application for investment adviser registration, called Form ADV, which is24 required to be filed with the SEC and made available as a public record.2541.During the Relevant Period, SFA filed Forms ADV that contained material26 misrepresentations and omissions, including but not limited to the following:2728a.Item 6 of Form ADV Part 1 requires disclosure of other business activitiesthat the firm is engaged in, such as acting as an insurance broker. In itsCOMPLAINTSEC V. KEITH SPRINGER, ET AL.8
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 10 of 191Forms ADV filed between January 2014 and March 2018, SFA stated that2it was not engaged in any other business activities even as it was selling3fixed indexed annuities to its advisory clients through Springer’s4insurance license.5b.In its Forms ADV filed between January 2014 and March 2018, SFA6failed to make required disclosures regarding Defendants’ compensation7arrangements and resulting conflicts of interest. Those disclosures were8required to be identified in Items 5 and 14 of Form ADV Part 2A and Item95 of Form ADV Part 2B.10c.In its Forms ADV filed between January 2014 and August 2019, SFA11falsely stated in Item 10 of Form ADV Part 2A that “[a]ll material12conflicts of interest . . . are disclosed regarding SFA, its representatives or13any of its employees, which could be reasonably expected to impair the14rendering of unbiased and objective advice.” In fact, SFA failed to15disclose numerous conflicts of interest created by compensation16arrangements that incentivized Defendants to recommend or direct client17funds into particular investments.18d.In its Forms ADV filed between July 2014 and August 2019, SFA falsely19stated in Item 4 of Form ADV Part 2A that “SFA provides discretionary20portfolio management services . . . custom tailored to meet the needs and21investment objectives of the client.” In fact, SFA outsourced its portfolio22management services to Third Party Asset Manager and, as of at least23August 2017, directed client funds into portfolios based on Defendants’24own financial incentives.2542.During the Relevant Period, Springer was responsible for and involved in the26 filing of SFA’s Forms ADV. Springer approved the content of SFA’s Forms ADV before they27 were filed and/or provided to clients, and signed several of SFA’s Forms ADV between March28 2014 and August 2016, but failed to correct the misrepresentations and omissions therein.COMPLAINTSEC V. KEITH SPRINGER, ET AL.9
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 11 of 19143.Defendants knew, or were reckless in not knowing, that SFA’s Forms ADV2 contained material misstatements and omissions.3D.Defendants Failed to Timely Amend and Deliver Forms ADV444.As a registered investment adviser, SFA was required by SEC regulation to5 deliver a copy of its current Form ADV Part 2A to prospective clients at or before the time they6 became new clients.745.SFA was further required to amend its Form ADV annually and promptly after8 any information in its Form ADV became materially inaccurate. If there were material changes9 to Part 2A of its Form ADV, SFA was required to deliver to its clients either an updated version10 of the Form ADV Part 2A or a summary of the changes.1146.Defendants failed to comply with these requirements on numerous occasions.1247.At Springer’s direction, prospective clients were either not provided with SFA’s13 Form ADV Part 2A or it was made available to them only after they had retained Defendants.1448.Defendants also failed to timely amend SFA’s Form ADV and to deliver its15 amended Form ADV Part 2A to clients. For instance, in July 2014, SFA entered into an16 agreement with Third Party Asset Manager and thereafter had nearly all of its new and existing17 clients use Third Party Asset Manager’s services. This new arrangement fundamentally changed18 SFA’s fee structure and SFA’s responsibilities as it delegated portfolio management to a third19 party and shared investment management fees with a third party. SFA did not amend its Form20 ADV to disclose this change until March 2015.2149.In July 2017, SFA entered into a revised agreement with Third Party Asset22 Manager whereby Third Party Asset Manager was designated a sub-adviser for client accounts.23 This new arrangement further changed SFA’s fee structure and its relationship with Third Party24 Asset Manager. The new agreement also changed its clients’ relationships with Third Party25 Asset Manager in that the clients no longer had a direct advisory relationship with Third Party26 Asset Manager, but rather Third Party Asset Manager was now a sub-adviser. SFA did not27 amend its Form ADV to disclose this change until March 2018 and failed to deliver either the28 updated Form ADV Part 2A or a summary of the changes to clients.COMPLAINTSEC V. KEITH SPRINGER, ET AL.10
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 12 of 19150.During the Relevant Period, Springer had ultimate authority over the content and2 filing of SFA’s Form ADVs. Springer also signed a number of Forms ADV during the Relevant3 Period.451.Springer knew, or was reckless in not knowing, that SFA (i) failed to timely5 deliver its Form ADV 2A to new clients; and (ii) failed to promptly amend SFA’s Form ADV6 filings after there were material changes to its business and to deliver an updated version of the7 Form ADV Part 2A or a summary of the changes to Defendants’ clients.8E.SFA Had an Inadequate Compliance Program952.During the Relevant Period, SFA failed to adopt and implement adequate written10 compliance policies and procedures. SFA’s compliance policies and procedures were inadequate11 because (i) they were outdated; (ii) they were not tailored to SFA’s actual business practices; and12 (iii) what policies and procedures did exist were not implemented.1353.SFA’s compliance manual, which constituted its compliance policies and14 procedures, was not updated substantively between 2009 and 2017 even though SFA’s business15 practices changed significantly during that period and outside compliance consultants16 recommended changes to SFA’s policies and procedures that SFA did not make.1754.During the Relevant Period, although a substantial portion of SFA’s business18 included sales of annuities to its advisory clients and the use of a third party asset manager, there19 were no policies or procedures concerning either practice.2055.SFA also lacked any policies regarding how the firm should identify, disclose,21 and address potential and actual conflicts of interest.2256.In addition, SFA had an advertising policy, but it was generic with no specific23 guidelines with respect to certain frequently used marketing materials, such as Springer’s radio24 show and SFA’s website.2557.Not only did SFA fail to adopt adequate compliance policies and procedures, it26 failed to implement the policies and procedures it did have. For example, SFA did not follow its27 advertising policy of having its Chief Compliance Officer or other designated officer sign and28 date all advertisements.COMPLAINTSEC V. KEITH SPRINGER, ET AL.11
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 13 of 19158.During the Relevant Period, Springer retained ultimate responsibility for2 maintaining an adequate compliance program for SFA.359.Springer knew, or was reckless in not knowing, that SFA failed to adopt and4 implement written policies and procedures reasonably designed to prevent violation by the firm5 and its supervised persons of the Advisers Act and rules promulgated thereunder.6F.SFA Failed to Maintain Required Books and Records760.SFA failed to maintain certain required books and records. For example, during8 the Relevant Period, SFA failed to keep records of when it delivered its Form ADV Part 2A to9 clients, failed to keep copies of its advertisements, and failed to maintain documents concerning10 customer complaints and its annual compliance reviews.1161.During the Relevant Period, Springer retained ultimate responsibility for12 maintaining required books and records.1362.Springer knew, or was reckless in not knowing, that SFA failed to maintain14 certain books and records as required.15FIRST CLAIM FOR RELIEF16Violation of Sections 206(1) and 206(2) of the Advisers Act by Springer and SFA17Aiding and Abetting SFA’s Violation by Springer1863.The SEC realleges and incorporates by reference paragraphs 1 through 62, as19 though fully set forth herein.2064.At all relevant times, Defendants were “investment advisers” within the meaning21 of Section 202(a)(11) of the Advisers Act [15 U.S.C. § 80b-2(a)(11)]. Springer and SFA each22 were in the business of providing investment advice concerning securities for compensation.23 Springer was also an investment adviser due to his ownership, management, and control of SFA.2465.As set forth above, Defendants, by use of the mails or any means of25 instrumentality of interstate commerce, directly or indirectly, acting intentionally, knowingly, or26 recklessly: (a) have employed or are employing devices, schemes, or artifices to defraud clients27 and/or potential clients; or (b) have engaged or are engaging in transactions, practices, or courses28 of business which operate as a fraud or deceit upon a client or prospective client.COMPLAINTSEC V. KEITH SPRINGER, ET AL.12
Case 2:19-cv-02559-WBS-EFB Document 1 Filed 12/19/19 Page 14 of 19166.Defendants owed a fiduciary duty of utmost good faith, loyalty, and care to make2 full and fair disclosures to their clients, including of any conflicts or potential conflicts of3 interests, as well the duty to act in the clients’ best interests, and not to act in Defendants’ own4 interests to the detriment of their clients. Defendants breached their fiduciary duty to their5 clients, and engaged in a scheme to violate Sections 206(1) and 206(2) of the Advisers Act.667.As a result, Springer and SFA have violated Sections 206(1) and 206(2) of the7 Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2)], and unless restrained and enjoined will continue8 to violate these provisions.968.Springer knowingly and recklessly provided substantial assistance to SFA’s10 violations.1169.As a result, Springer aided and abetted SFA’s violations of Sections 206(1) and12 206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2)], and unless restrained and13 enjoined, will continue to aid and abet such violations.14SECOND CLAIM FOR RELIEF15Violation of Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) Thereunder by SFA16Aiding and Abetting SFA’s Violation by Springer1770.The SEC realleges and incorporates by reference paragraphs 1 through 64, as18 though fully set forth herein.1971.Section 206(4) of the Advis
Keith Springer, age 55, is a resident of Sacramento, California. Springer is the President and sole owner of SFA, and at all times owned, managed, and controlled SFA. Springer founded SFA, holds himself out as an investment adviser, provides investment management advice to SFA's clients, and is compensated for his services. From April 2016
