A Rockland County film financier has agreed to settle charges with the U.S. Securities and Exchange Commission for failing to disclose conflicts of interest to his investors.
The SEC censured Christopher Conover, 47, of Blauvelt, and his Hudson Valley Wealth Management Inc., of Pearl River, in a May 14 cease-and-desist order.
Conover and his firm violated SEC rules that prohibit investment advisers from engaging in any transaction “that operates as a fraud or deceit upon a client” and for making misleading statements to investors.
Conover was ordered to pay $777,711 and Hudson Valley was ordered to pay $200,000 to the SEC.
Conover founded Hudson in 2008 to provide wealth management services to wealthy investors. As of March, the firm reported that it was managing $112 million for 90 clients.
In 2014, Conover set up a fund for making loans to film and TV production companies. In 2017, he negotiated a deal to raise money exclusively for Toronto producer Jason Cloth’s Creative Wealth Media Finance Corp. and Bron Studios.
Loans were typically for one to two years and carried interest rates from 10% to 30%. Conover’s investors made money when loans were repaid.
Conover raised about $22 million for eight films, according to the SEC. One of the projects, for instance, was “Bombshell,” a 2019 film featuring Charlize Theron and Nicole Kidman as employees who take on Fox News executive Roger Ailes and a toxic workplace.
Conover was paid $531,787 as an executive producer for the films, according to the cease-and-desist order, and none of that money was distributed to his clients.
He had told clients that the fees had been determined before they invested in any film, according to the cease-and-desist order. In fact the fees were based solely on the clients’ investments.
In 2021, the production company began defaulting on the loans and Hudson frequently lacked sufficient cash to redeem client investments. When that happened, the SEC says, Conover would partially satisfy clients’ redemption requests on a pro rata basis.
But in May 2021 he deviated from that practice and gave one client preferential treatment. He paid the full amount requested, $187,789, to a portfolio manager of a large private equity firm whose help he wanted, according to the SEC. He paid nothing to other clients who were trying to redeem $750,000.
Conover was recently vindicated in a related matter.
His Hudson Private Corp. and Hudson LP accused the film producer of misusing investments, in a 2021 lawsuit filed in U.S. District Court, White Plains. On March 20, federal judge Cathy Seibel ordered Creative Wealth Media Finance Corp. to pay $26.9 million to the Hudson companies.
