The Securities and Exchange Commission has instituted public administrative proceedings against Carl S. Schwartz, a certified public accountant in New Jersey, for violating the Securities and Exchange Commission’s Investment Advisers Act of 1940. Schwartz, 67, was the president, chief compliance officer, managing member, and 49% owner of RRBB Asset Management, Inc., an investment adviser registered with the Commission. The Commission found Schwartz’s misconduct in an action brought by the Commission and the Commission’s jurisdiction over him. In SEC v. Carl S. Schwartz, et al., the court permanently ordered Schwartz from future violations of the Exchange Act, Securities Act, Investment Advisers Act, and Advisors Act. Schwartz was ordered to pay $50,000 in disgorgement, $13,754.12 in prejudgment interest, and a $100,000 civil money penalty.
The complaint alleged that Schwartz engaged in a fraudulent trade allocation scheme, breaching his and RRBBAM’s fiduciary duties to their advisory clients. The Commission deemed it appropriate and in the public interest to impose the sanction agreed to in the Offer. The Commission may reinstate a respondent as an accountant after 5 years. To reinstate, the respondent must submit a written statement stating they will have their work reviewed by an independent audit committee, as long as they practice before the Commission and comply with requirements. If the respondent is a member of an audit committee, they must submit a statement from the committee describing their responsibilities, role, policies, procedures, and the necessity of their service.
Additionally, the respondent must be associated with a public accounting firm registered with the PCAOB in accordance with the Sarbanes-Oxley Act of 2002. The respondent must provide a statement from their associated firm stating that the PCAOB has not found any issues with their quality control system and that no disciplinary actions have been taken against them since seven years ago. If they are a certified public accountant, they must provide documentation showing they have resolved disciplinary issues with state boards of accountancy. Additionally, they must submit an affidavit stating they have complied with the suspension order, have not been convicted of a felony or misdemeanor involving moral turpitude, have not been found guilty of a violation of federal securities laws, and have not been charged with a violation of federal securities laws. The respondent has not been found guilty of moral turpitude offenses or charged with moral turpitude offenses.
Their conduct is not at issue in pending investigations, and they have complied with all orders and sanctions. They must provide a detailed description of their professional history since the Order’s imposition. The Commission may conduct an investigation to determine the accuracy of attestations provided by the respondent. If no contrary information is found, the Commission may reinstate the respondent for cause shown. If not, the Commission may hold a hearing to determine if cause has been shown to allow the respondent to resume appearing and practicing as an accountant.