SEC Charges Theorem Fund Services LLC for Failing to Respond to Red Flags of Fraud Against a Private Fund and Its Investors

The Securities and Exchange Commission (SEC) announced today that it has settled charges with Theorem Fund Services LLC (TFS), a fund administrator in Boca Raton, Florida, for failing to respond to red flags surrounding fraud from a private fund and its investors. The SEC issued the charges in May 2022, stating that “fund administrators are important gatekeepers in the private fund space” and TFS did not uphold its responsibilities by distributing inaccurate account statements to investors despite clear warning signs of fraud. As part of the settlement, without admitting or denying guilt, TFS agreed to a cease-and-desist order, pay a civil penalty of $100,000, disgorgement of $18,000 and prejudgment interest of $4,271. The investigation was conducted by Heather E. Marlow and Brian Fitzpatrick of SEC's Asset Management Unit, Marc Ricchiute and Tracy Bowen of Denver Regional Office, Daniel Faigus of Division of Examinations' Private Funds Unit and trial counsel Zachary Carlyle of the Denver Regional Office. It was supervised by Kimberly Frederick of the Asset Management Unit.