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UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940

Release No. 4575 / November 29, 2016

ADMINISTRATIVE PROCEEDING

File No. 3-17699

In the Matter of

SHERVIN NEMAN and 

NEMAN FINANCIAL, INC., 

Respondents.

ORDER INSTITUTING ADMINISTRATIVE 

PROCEEDINGS PURSUANT TO SECTIONS

203(e) AND 203(f) OF THE INVESTMENT 

ADVISERS ACT OF 1940 AND NOTICE OF 

HEARING

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative proceedings be, and hereby are, instituted pursuant to 

Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against 

Respondents Shervin Neman (“Neman”) and Neman Financial, Inc. (“Neman Financial”) 

(collectively, “Respondents”). 

II.

After an investigation, the Division of Enforcement alleges that:

A. RESPONDENTS

1. Respondent Shervin Neman, age 35, is a California resident who is the sole owner 

and chief executive officer of Respondent Neman Financial, Inc. 

2. Respondent Neman Financial, Inc. is a California corporation registered with the 

Commission as an investment adviser. Neman Financial was formed by Neman in June 2010, with 

its principal place of business in Los Angeles, California.

B. THE DISTRICT COURT ACTION AND ENTRY OF THE INJUNCTION

3. On April 11, 2012, the Commission filed an action in the United States District 

Court for the Central District of California against Neman and Neman Financial alleging that they 
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were engaged in an ongoing Ponzi scheme and seeking emergency relief. SEC v. Shervin Neman 

and Neman Financial, Inc., Case No. CV 12-03142 (C.D. Cal.). The Complaint alleged that the 

Respondents solicited investors for three categories of investments: (1) foreclosed bank-owned 

properties which Neman Financial had purportedly purchased in bulk and would resell to buyers 

with whom Neman had a longstanding relationship and who had committed to purchase the 

properties; (2) investment in a pool of investor funds which would be used to purchase shares of 

issuers such as Facebook and ZocDoc, Inc.; and (3) investment in a pool of investor funds which 

would be used to purchase shares of issuers such as General Motors, LinkedIn, Groupon, and 

Angie’s List prior to their initial public offerings (“IPOs”), which shares would be sold at a profit 

after the IPOs. In fact, rather than investing client monies in these securities, the Respondents 

operated a Ponzi scheme, using new investor funds to pay principal and purported profits to 

existing investors. Neman also used investor funds to make various personal purchases. 

4. On April 13, 2012, the district court granted the Commission’s application for a 

temporary restraining order prohibiting future violations of the antifraud provisions and other 

relief. On April 18, 2012, the district court issued a preliminary injunction.

5. On May 16, 2013, the district court issued an order to stay discovery pending the 

resolution of United States v. Neman, Case No. CR 13-289 (C.D. Cal.), a criminal case brought 

against Neman subsequent to the Commission filing its action, arising substantially from the same 

facts on which the Commission’s action was based. Neman was found guilty of two counts of wire 

fraud and one count of mail fraud, and sentenced to a term of 135 months in prison and ordered to 

pay restitution of $3,279,185.63.

6. The Commission filed a motion for summary judgment against Neman in SEC v. 

Neman based on the facts underlying the criminal conviction and other undisputed facts. On 

September 24, 2015, the district court issued an order granting the Commission’s motion as to four 

of its six claims for relief against Neman, which order the district court corrected and amended on 

December 15, 2015.

7. The Commission subsequently filed a motion for default judgment against Neman 

Financial. On July 15, 2016, the district court issued an order granting the Commission’s motion 

as to all six of its claims for relief against Neman Financial.

8. The Commission filed a second summary judgment motion against Neman with 

regard to its remaining two claims. On November 7, 2016, the district court issued an order 

granting the Commission’s motion as to its remaining two claims against Neman.

9. On November 16, 2016, the district court entered a final judgment against Neman 

and Neman Financial, Inc., permanently enjoining the Respondents from future violations of the 

antifraud provisions of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities 

Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2)and (4) of the Advisers 

Act; the books and records requirements of Section 204(a) of the Advisers Act and Rule 204-2 

thereunder; and the registration requirements of Section 203A of the Advisers Act.
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III.

In view of the allegations made by the Division of Enforcement, the Commission deems it 

necessary and appropriate in the public interest that public administrative proceedings be instituted 

to determine:

A. Whether the allegations set forth in Section II hereof are true and, in connection 

therewith, to afford Respondents an opportunity to establish any defenses to such allegations; 

B. What, if any, remedial action is appropriate in the public interest against Respondent 

Neman pursuant to Section 203(f) of the Advisers Act; and

C. What, if any, remedial action is appropriate in the public interest against Respondent 

Neman Financial pursuant to Section 203(e) of the Advisers Act.

IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the questions 

set forth in Section III hereof shall be convened at a time and place to be fixed, and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.110.

IT IS FURTHER ORDERED that Respondents shall file an Answer to the allegations 

contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 

of the Commission’s Rules of Practice, 17 C.F.R. § 201.220. 

If Respondents fail to file the directed answer, or fail to appear at a hearing after being duly 

notified, the Respondents may be deemed in default and the proceedings may be determined against 

them upon consideration of this Order, the allegations of which may be deemed to be true as 

provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. 

§§ 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served forthwith upon Respondents as provided for in the 

Commission’s Rules of Practice. 

IT IS FURTHER ORDERED that, pursuant to Rule 360(a)(2) of the Commission’s Rules 

of Practice, 17 C.F.R. § 201.360(a)(2), the Administrative Law Judge shall issue an initial decision 

no later than 75 days from the occurrence of one of the following events: (A) The completion of 

post-hearing briefing in a proceeding where the hearing has been completed; (B) Where the 

hearing officer has determined that no hearing is necessary, upon completion of briefing on a 

motion pursuant to Rule 250 of the Commission’s Rules of Practice, 17 C.F.R. § 201.250; or (C) 

The determination by the hearing officer that a party is deemed to be in default under Rule 155 of 

the Commission’s Rules of Practice, 17 C.F.R. § 201.155 and no hearing is necessary. 
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In the absence of an appropriate waiver, no officer or employee of the Commission engaged 

in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as witness 

or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within 

the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 

provisions of Section 553 delaying the effective date of any final Commission action.

For the Commission, by its Secretary, pursuant to delegated authority.

Brent J. Fields

Secretary