SEC fines and censures Westchester investment firms

The U.S. Securities and Exchange Commission has censured two Westchester firms for failures to disclose essential information to investors.

Apexium Financial LP, of Rye, and Forepont Capital LLC, of White Plains, were also fined $150,000 each and ordered to cease and desist from violating SEC rules, in orders filed on Sept. 28.

Apexium, a registered broker that primarily serves high net worth individuals and manages $2.2 billion in assets, failed to manage a conflict of interest from 2018 through 2020, according to the SEC.

An affiliate in Rowayton, Connecticut that the firm used to manage client assets was co-owned by three Apexium owners.

Apexium disclosed the potential conflict in its client brochure, stating, for instance, that some of its owners “will profit due to their ownership” in the affiliate.

The firm said it would overcome the conflict by evaluating alternative managers, allowing clients to use a manager of their choice, and documenting why its affiliate is best for the clients.

But the firm did not follow through with its pledges, according to the SEC. It also did not adopt and implement policies and procedures to ensure that it operated in accordance with its brochure, and it failed to conduct annual policies and procedures reviews.

The SEC concluded that the firm had violated regulations that make it unlawful to engage in transactions or practices that operate “as a fraud or deceit upon any client or prospective client.”

Apexium has since revised its policies and procedures to address the SEC’s concerns.

The order does not identify the affiliate firm or the co-owners. According to Apexium’s 2023 registration, it is owned and managed by David J. Pilaitis, Cory M. Chmelka, Matthew A. Marcello, Apexium Holdings LLC and Brunswick Trust U/A DTD.

Forepont Capital is a broker-dealer that invests in biotech, medtech and e-health start-ups. It manages $82 million in assets for two clients.

The SEC says the firm failed to disclose to the clients of a private fund that it had retroactively transferred securities to the fund that were held by three Forepont executives and its venture partner.

Assets transferred to the fund also included securities of a company whose CEO and co-founder is the brother of Forepont’s CEO, and securities of a company whose chairman is Forepont’s venture partner.

The firm also failed to distribute audited finance statements for 2020 and 2021 to investors in two private funds.

The order does not identify the individuals whose conduct violated disclosure rules. According to Forepont’s 2023 registration, the owners and executives include Eric M. Attias, Bruce I. Greenberg, Ismail Kola, Tizot Julien, Philippe Louisadat and Frederic R. Batoua.