The U.S. Securities and Exchange Commission (SEC) has filed settled charges against registered investment adviser Momentum Advisors LLC, its former managing partner Allan J. Boomer, and former chief operating officer Tiffany L. Hawkins, for breaching their fiduciary duties and misusing assets from a private fund and its portfolio companies.
According to the SEC’s orders, Hawkins engaged in misconduct from at least August 2021 through February 2024 by misappropriating approximately $223,000 from portfolio companies of a private fund she managed. Hawkins used company debit cards in over 100 transactions to cover personal expenses such as vacations, clothing, and other non-business-related items. Additionally, she unlawfully paid herself compensation above her authorized salary.
The SEC’s orders also found that Boomer, despite noticing red flags of Hawkins’ actions, failed to adequately supervise her. Boomer was responsible for a separate breach when he caused the fund to cover a business debt that should have been paid by a separate entity he and Hawkins controlled, benefiting the entity by $346,904. Furthermore, Momentum Advisors failed to implement sufficient policies and procedures to prevent such actions and did not conduct the required audits of the fund.
Fiduciary Breaches and Consequences
The SEC charged Hawkins and Boomer with violating the antifraud provisions of the Investment Advisers Act of 1940. In addition, Momentum Advisors was found to have violated compliance and custody rules under the same act.
Without admitting or denying the SEC’s findings, the three parties consented to the entry of cease-and-desist orders. As part of the settlement, Hawkins agreed to pay a $200,000 civil penalty and is barred from associating with any investment adviser. Boomer, who will serve a 12-month supervisory suspension, also agreed to pay an $80,000 civil penalty. Momentum Advisors was censured and ordered to pay a civil penalty of $235,000.
Thomas P. Smith, Jr., Associate Regional Director in the SEC’s New York Regional Office, emphasized the gravity of the violations. “As the orders find, Hawkins and Boomer breached their fiduciary duties and misused fund and portfolio company assets for their own benefit, all to the detriment of their clients,” Smith stated.
The SEC’s investigation was conducted by Alexander M. Levine, James Flynn, and Steven G. Rawlings, with oversight from Thomas P. Smith, Jr. The examination that led to the investigation was carried out by Emanuel S. Asmar, Majid S. Mahmood, and Arjuman Sultana of the SEC’s Division of Examinations in the New York Regional Office.
