Gregory M. Prusa was the Chief Compliance Officer of the Salus, LP, a hedge fund. Among other problems, Mr. Prusa made false or misleading statements in the Form ADV filing for Salus. Now he is barred from the securities industry.
The general rule is the the CCO should only be subject to an action if he or she was involved in the wrongdoing, impeded the investigation or completely failed in the compliance program.
Mr. Prusa was also the CEO of Salus and its general partner S.A.I.C., Limited. Two hats can lead to trouble. The problem here was fundraising.
Mr. Prusa and is partner Brandon E. Copeland launched Salus in October 2107 and filed a Form ADV in November 2017. The filing indicated $20 million in RAUM and reasonable expectation to reach the higher RAUM required with filing with the SEC within 120 days.
In April 2018 and January 2019, Salus filed Form ADVs stating that it was a “large advisory firm” with $178 million in RAUM. Some of filings indicated that in addition to the Salus fund the firm also had high net worth individual clients that had a mix of bonds and equities. All of the Form ADV filings stated the auditor, custodian and prime broker for the hedge fund.
None of that information in the Form ADV was true. Salus never had any RAUM or reasonable expectation of having sufficient RAUM. It never had any individual clients. The fund never had any of those key relationships.
Unsurprisingly, the lies carried over to the Confidential Offering Memorandum for the hedge fund. The fund never received any capital commitments, so it never had any investments and never an auditor, custodian or prime broker.
It does have a website. https://www.salushedgefund.com/
The facts lay out Mr. Prusa being involved in the wrongdoing. So it seems appropriate to bring an action against him.
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