SEC goes after Sisu Capital for breaching fiduciary duties to clients
The Securities and Exchange Commission (SEC) has charged Timothy Overturf of Arcata, California and his investment advisory firm Sisu Capital, LLC for breaching their fiduciary duties to clients, including by making unauthorized and unsuitable trades in client accounts from December 2017 through at least May 2021.
The SEC also charged Overturf’s father, Hansueli “Hans” Overturf, with aiding and abetting his son’s and Sisu Capital’s violations.
The SEC’s action alleges that Sisu Capital and Timothy Overturf failed their clients on multiple occasions. First, the SEC’s complaint alleges that from 2017 through 2021, Sisu Capital and Timothy Overturf allowed Hans Overturf to give investment advice to Sisu Capital clients while Hans had been suspended from providing investment advisory services by the State of California.
Second, the SEC’s complaint further alleges that Sisu Capital, Timothy, and Hans traded contrary to client instructions and to benefit their own interests by investing client funds in a thinly-traded bank stock. Sisu Capital and Timothy allegedly purchased the stock as part of an undisclosed plan to amass collectively enough shares among Sisu Capital’s clients and themselves for Timothy to propose business partnership ideas to the bank.
Third, as alleged in the SEC complaint, from 2017 to 2021, Hans recommended, and Timothy purchased on his clients’ behalf, an unsuitable, complex financial instrument intended for short-term use, which Sisu Capital’s clients then held for months.
Throughout these courses of conduct, according to the SEC’s complaint, Sisu Capital generated over $2 million in advisory fees and other compensation.
The SEC’s complaint, filed in federal court in San Francisco, charges Sisu Capital and Timothy Overturf with violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and Hans Overturf with aiding and abetting his son’s and Sisu Capital’s violations. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties.