UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING 

File No. 3-20381

In the Matter of

Securities America Advisors, Inc.

Respondent.

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AMENDED PROPOSED PLAN OF 

DISTRIBUTION

I. OVERVIEW

1. The Division of Enforcement submits this Amended Proposed Plan of 

Distribution (the “Plan”) to the United States Securities and Exchange Commission (the 

“Commission”) pursuant to Rule 1101 of the Commission’s Rules on Fair Fund and 

Disgorgement Plans (the “Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for 

the distribution of a Fair Fund (the “Fair Fund”) comprised of civil money penalties paid by 

Securities America Advisors, Inc. (the “Respondent”) in the above-captioned matter.1 

2. As described more specifically below, the Plan seeks to compensate investors

who held advisory accounts at the Respondent during the period November 1, 2014 through 

March 31, 2018, inclusive (the “Relevant Period”) and who suffered a loss as a result of the 

misconduct described in the Order. Based on information obtained by the Commission staff 

during and after its investigation and the review and analysis of those records, the Commission 

staff has reasonably concluded that it has all records necessary to identify the harmed investors 

and to calculate each investor’s harm. As a result, the Fair Fund is not being distributed 

according to a claims-made process, so procedures for making and approving claims in 

accordance with Rule 1101(b)(4) of the Commission’s Rules, 17 C.F.R. § 201.1101(b)(4), are 

not applicable.

3. As calculated using the methodology detailed in the Plan of Allocation (attached 

as Exhibit A), investors who held advisory accounts at the Respondent during the Relevant 

Period will be compensated for losses resulting from the misappropriation of their assets as a 

result of the Respondent’s violations.

 

1

 See Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of 

the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist 

Order, Advisers Act Rel. No. 5762 (June 30, 2021) (the “Order”).
2

4. In the view of the Commission staff, this methodology constitutes a fair and 

reasonable allocation of the Fair Fund. 

5. The Commission has custody of the Fair Fund and shall retain control of the 

assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission 

retains jurisdiction over its implementation.

II. BACKGROUND

6. On June 30, 2021, the Commission issued the Order instituting and 

simultaneously settling administrative and cease-and-desist proceedings against the Respondent. 

In the Order, the Commission found that, from November 2014 to March 2018, the Respondent 

failed to implement policies and procedures for the review of automatically generated 

surveillance alerts after client disbursements had occurred. The Respondent also failed to 

implement reasonably designed policies and procedures for reviewing client disbursement 

requests for possible misappropriation before the disbursements occurred. As a result of these 

failures, Hector May, the owner of Executive Compensation Planners, Inc. (“ECP”), an

independent state-registered investment adviser whose clients participated in certain of the 

Respondent’s advisory programs, misappropriated, without the Respondent’s detection, 

approximately $8 million from the Respondent’s advisory accounts of certain of the 

Respondent’s advisory clients. The Commission ordered the Respondent to pay a $1,750,000 

civil money penalty to the Commission. The Commission also created the Fair Fund pursuant to 

Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to 

harmed investors.

7. The Respondent has paid in full. The Fair Fund has been deposited at the United 

States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for investment, and 

any accrued interest will be for the benefit of the Fair Fund. 

III. DEFINITIONS

As used in this Plan, the following definitions will apply:

8. “Administrative Costs” shall mean any administrative costs and expenses, 

including without limitation tax obligations, the fees and expenses of the Tax Administrator, and 

investment and banking costs. 

9. “Distribution Payment” means a payment from the Fair Fund to a Payee in 

accordance with the terms of this Plan.

10. “Eligible Claimant” means a Preliminary Claimant who is determined to have 

suffered a Recognized Loss pursuant to the Plan of Allocation and who is not an Excluded Party 

or an Unresponsive Preliminary Claimant.

11. “Excluded Party” shall mean: (a) the Respondent, and the Respondent’s 

advisers, agents, nominees, assigns, heirs, or controlled entities; (b) Hector May, the defendant in 
3

US v. May, 18 CR 880 (VB) (S.D.N.Y), and his agents, nominees, assigns, heirs, spouse, parents, 

children, or controlled entities, including without limitation, ECP and its employees; and (c) any 

purchaser or assignee of another Person’s right to obtain a recovery from the Fair Fund for value; 

provided, however, that this provision shall not be construed to exclude those Persons who 

obtained such a right by gift, inheritance or devise.

12. “Fair Fund” means the fund created by the Commission pursuant to Section 

308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondent’s 

violations described in the Order.

13. “Final Determination Notice” means the written notice sent by the Fund 

Administrator to (a) any Preliminary Claimant who timely submitted a written dispute of his, her, 

or its calculated Investment and Recovery notifying the Preliminary Claimant of her resolution 

of the dispute; and (b) those Preliminary Claimants who have not responded to the Plan Notice as 

described in paragraph 38, except for those whose Plan Notice were returned as “undeliverable,” 

notifying the Preliminary Claimant that he, she, or it has been deemed an Unresponsive 

Preliminary Claimant. The Final Determination Notice will constitute the Fund Administrator’s 

final ruling regarding the status of the claim.

14. “Investment” means amounts paid by the Preliminary Claimant to ECP during 

the Relevant Period, exclusive of any interest, dividend, or unrealized gains. 

15. “Initial Balance” means the sum of the Preliminary Claimant’s payments to ECP 

prior to the Relevant Period; less any amounts returned on those payments, including without 

limitation, redemptions, periodic withdrawals, interest or dividend payments, prior to the 

Relevant Period. 

16. “Net Available Fair Fund” means the Fair Fund, plus any interest or earnings, 

less Administrative Costs. 

17. “Payee” means an Eligible Claimant whose distribution amount is equal to or 

greater than $10.00, as calculated in accordance with the Plan of Allocation, who is determined 

to receive a Distribution Payment.

18. “Person” means natural individuals as well as legal entities such as corporations, 

partnerships, or limited liability companies. 

19. “Plan Notice” means a written notice from the Fund Administrator to each

Preliminary Claimant regarding the Commission’s approval of the Plan, including, as 

appropriate: a statement characterizing the distribution; a link to the approved Plan posted on the 

Commission’s website and instructions for requesting a copy of the Plan; specification of any 

information needed from the Preliminary Claimant to prevent him, her, or it from being deemed 

an Unresponsive Preliminary Claimant; his, her, or its calculated Investment and Recovery and 

instructions on how to dispute the same; a description of the tax information reporting and other 

related tax matters; the procedure for the distribution as set forth in the Plan; and the name and 
4

contact information for the Fund Administrator as a resource for additional information or to 

contact with questions regarding the distribution. 

20. “Plan of Allocation” means the methodology by which a Preliminary Claimant’s 

Recognized Loss is calculated. The Plan of Allocation is attached as Exhibit A. 

21. “Preliminary Claimant” means a Person, or their lawful successors, identified 

from the records obtained by the Commission staff during and after its investigation, who held 

advisory accounts at the Respondent during the Relevant Period and who may have suffered 

losses as a result of the misconduct described in the Order.

22. “Recognized Loss” means the amount of loss calculated for a Preliminary 

Claimant in accordance with the Plan of Allocation. The Preliminary Claimant’s Recognized 

Loss will be calculated as the difference between the Preliminary Claimant’s aggregate 

Investment and aggregate Recovery, with each Investment and Recovery amount adjusted for the 

time value of money as described in the Plan of Allocation.

23. “Recovery” means any amount recouped by the Preliminary Claimant on their 

Investment or their Initial Balance, including without limitation, redemptions, periodic 

withdrawals, interest or dividend payments, as well as compensation for the loss that resulted 

from the conduct described in the Order that was received from another source, such as amounts 

recovered through private litigation or FINRA proceedings, to the extent known to the Fund 

Administrator. Recovery will not include amounts obtained in private litigation or FINRA 

proceedings that were awarded and paid to counsel for fees and expenses of the proceeding, or

amounts expressly identifiable as the time value of money on a Preliminary Claimant’s payment 

to ECP prior to the Relevant Period. 

24. “Relevant Period” is November 1, 2014 through March 31, 2018, inclusive.

25. “Unresponsive Preliminary Claimant” means a Preliminary Claimant whose 

address the Fund Administrator has not been able to verify and/or who does not timely respond 

to the attempts by the Fund Administrator to obtain information, including any information 

sought in the Plan Notice. Unresponsive Preliminary Claimants will not be eligible for a 

distribution under the Plan.

IV. TAX COMPLIANCE

26. On October 18, 2021, the Commission appointed Miller Kaplan Arase LLP as the 

tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of the 

Fair Fund.

2

 The Tax Administrator will be compensated for reasonable fees and expenses from 

the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the 

Commission.3

 

2

 See Order Appointing Tax Administrator, Exchange Rel. No. 93775 (Oct. 18, 2021).

3

 See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish 

Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).
5

27. The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section 

468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related 

regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the 

administrator of such QSF for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the 

tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not 

limited to:

(a) Obtaining a taxpayer identification number; 

(b) Requesting funds necessary for the timely payment of all applicable taxes, 

the payment of taxes for which the Tax Administrator has received funds, 

and the filing of applicable returns; and 

(c) Fulfilling any information reporting or withholding requirements imposed 

on distributions from the Fair Fund.

28. All tax obligations will be paid from the Fair Fund, subject to the review and 

approval of Commission staff.

V. FUND ADMINISTRATOR

29. Catherine E. Pappas is proposed to be the fund administrator for the Fair Fund 

(“Fund Administrator”). As a Commission employee, the Fund Administrator shall receive no 

compensation, other than her regular salary as a Commission employee, for her services in 

administering the Fair Fund. In accordance with Rule 1105(c) of the Commission’s Rules,4no 

bond is required since the Fund Administrator is a Commission employee.

30. The Fund Administrator will be responsible for administering the Fair Fund in 

accordance with the Plan. This will include, among other things, taking reasonable steps to 

obtain accurate mailing information for Preliminary Claimants; disseminating the Plan Notice; 

cooperating with the Tax Administrator to satisfy any tax liabilities and to ensure compliance 

with income tax reporting requirements, including but not limited to Foreign Account Tax 

Compliance Act (FATCA); directing the disbursement of the Fair Fund in accordance with this 

Plan as ordered by the Commission; working with the Commission’s Office of Financial 

Management (“OFM”) to research and reconcile errors; directing the reissue of payments, when 

possible; and working with the Tax Administrator to prepare a final accounting. 

31. To carry out the purposes of this Plan, the Fund Administrator, in consultation 

with the Commission staff, is authorized to make and implement immaterial changes to the Plan. 

If the Fund Administrator deems a change to be material, Commission approval of the change is 

required prior to implementation by amending the Plan.

32. The Fund Administrator may extend any procedural deadline contained in the 

Plan for good cause shown.

 

4

 17 C.F.R. § 201.1105(c).
6

VI. PLAN PROCEDURES

Specification of Preliminary Claimants

33. Using information obtained by the Commission staff during and after its 

investigation and the review and analysis of those records, the Commission has identified the 

Preliminary Claimants. 

Procedures for Locating and Notifying Preliminary Claimants

34. Within thirty (30) days of Commission approval of the Plan, the Fund 

Administrator will send the Plan Notice to each Preliminary Claimant’s last known email address 

(if known) and/or mailing address.

Undeliverable Mail

35. If any mailing is returned as undeliverable, the Fund Administrator will make the 

best practicable efforts to ascertain a Preliminary Claimant’s correct address. If another address 

is obtained, the Fund Administrator will then resend it the Preliminary Claimant’s new address 

within thirty (30) days of receipt of the returned mail. If the mailing is returned again, and the 

Fund Administrator, despite best practicable efforts, is unable to find a Preliminary Claimant’s 

correct address, the Fund Administrator, in its discretion, may deem such Preliminary Claimant 

an Unresponsive Preliminary Claimant. 

36. Any Preliminary Claimant who relocates or otherwise changes contact 

information after receipt of the Plan Notice must promptly communicate any change in address 

or contact information to the Fund Administrator.

Procedures to Request Plan Notice

37. Any Person who did not receive a Plan Notice as described in paragraph 34, but 

who is aware of this Plan (e.g., through other Preliminary Claimants or on www.sec.gov) and 

believes they should be included as a Preliminary Claimant, should contact the Fund 

Administrator, in writing, within sixty (60) days from the approval of the Plan to establish that 

they should be considered a Preliminary Claimant. Such Person should include with that 

communication, documentation sufficient to support their claim that they should be considered a 

Preliminary Claimant, as well as contact information (physical address, telephone number, and 

email address, if available) for responsive communications. The communication should be 

directed to:

SEC Office of Distributions

Attn: Catherine E. Pappas, Fund Administrator 

(AP File # 3-20381)

100 F Street NE

Mail Stop 5012

Washington, DC 20549
7

The Fund Administrator will send the Person a Plan Notice within thirty (30) days of receiving 

the Person’s documentation, if the Fund Administrator determines that the Person should have 

received a Plan Notice.

Failure to Respond to Plan Notice

38. If a Preliminary Claimant was requested to respond and fails to respond within 

thirty (30) days from the initial mailing of the Plan Notice, the Fund Administrator will make no 

fewer than two (2) attempts to contact the Preliminary Claimant by whatever alternative contact 

information is available, including telephone or email, and if no alternative contact information 

is available, by a second mailing. The second attempt will take place no more than sixty (60) 

days from the initial mailing of the Plan Notice. If a Preliminary Claimant fails to respond to the 

Fund Administrator’s contact attempts as described in this paragraph, the Fund Administrator, in 

its discretion, may deem such Preliminary Claimant an Unresponsive Preliminary Claimant. 

Dispute Process

39. Disputes will be limited to the amount of the calculated Investment and Recovery. 

Within thirty (30) days of the last mailing of the Plan Notice, the Fund Administrator must 

receive a written communication detailing any dispute along with any supporting documentation. 

The Fund Administrator will investigate the dispute, and such investigation will include a review 

of the written dispute as well as any supporting documentation. 

Final Determination Notices

40. Within one hundred twenty (120) days of the initial mailing of the Plan Notices, 

the Fund Administrator will send a Final Determination Notice to (a) any Preliminary Claimant 

who timely submitted a written dispute as described in paragraph 39 above, notifying the 

Preliminary Claimant of her resolution of the dispute; and (b) those Preliminary Claimants who 

have not responded to the Plan Notice, as described in paragraph 38 above, except for those 

whose Plan Notice were returned as undeliverable, notifying the Preliminary Claimant that he, 

she, or it has been deemed an Unresponsive Preliminary Claimant.

Distribution Methodology

41. Each Preliminary Claimant’s Recognized Loss will be calculated in accordance 

with the Plan of Allocation. All Preliminary Claimants who are determined to have a 

Recognized Loss, and who are not deemed an Excluded Party or an Unresponsive Preliminary 

Claimant, will be deemed Eligible Claimants. All Eligible Claimants who are determined to 

receive a Distribution Payment will be deemed a Payee.

Establishment of a Reserve

42. Before determining the amount of funds available for distribution and calculating 

each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax 
8

Administrator, will establish a reserve to pay Administrative Costs and to accommodate any 

unexpected expenditures (the “Reserve”).

43. After all Distribution Payments are made and Administrative Costs paid, any 

remaining amounts in the Reserve will become part of the Residual described in paragraph 56. 

Preparation of the Payment File

44. Within one hundred fifty (150) days of Commission approval of the Plan, the 

Fund Administrator will compile the Payee information, including the name, address, method of 

payment, the amount of any tax withholding, and the amount of the Distribution Payment for all 

Payees (the “Payee List”), necessary to make disbursements through BFS. 

Distribution of the Fair Fund

45. Pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R. 

§ 201.1101(b)(6), the Commission staff will obtain an order from the Commission authorizing 

the disbursement of funds to Payees in accordance with the Payee List. The BFS will mail 

checks or electronically transfer funds to each Payee as instructed by the Fund Administrator in 

accordance with the Payee List.

46. All checks will be void one year from the date of issuance. Checks that are not 

negotiated by the stale date will be voided, and the BFS will be instructed to stop payment on 

those checks. A Payee’s claim will be extinguished if he, she, or it fails to negotiate his, her or 

its check by the stale date, and the funds will remain in the Fair Fund, except as provided in 

paragraph 50.

47. All Distribution Payments will be preceded or accompanied by a communication 

that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that 

the tax treatment of the distribution is the responsibility of each Payee and that the Payee should 

consult his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a 

statement that checks will be void and cannot be reissued later than one year from the date the 

original check or payment was issued; and (d) contact information for the Fund Administrator for 

questions regarding the Distribution Payment. The letter or other mailings to Payees 

characterizing a Distribution Payment will be submitted to the Tax Administrator for review and 

approval. 

48. All Distribution Payments, either on their face or in the mailing referenced in 

paragraph 47, will clearly indicate that the money is being distributed from a Fair Fund 

established by the Commission to compensate investors for harm as a result of securities law 

violations.

Post Distribution; Handing of Returned or Uncashed Checks; and Reissues

49. The Fund Administrator shall use its best efforts to make use of commercially 

available resources and other reasonably appropriate means to locate all Payees whose checks 
9

are returned to the Fund Administrator as “undeliverable,” or whose electronic payment does not 

go through. If new address or payment information becomes available, the Fund Administrator 

will repackage the distribution check and send it to the new address or reissue the electronic 

payment. If new address or payment information is not available after a diligent search (and in 

no event no later than the stale date of the original check or one year from the original payment) 

or if the payment is returned again, the check shall be voided and the Fund Administrator shall 

instruct the issuing financial institution to stop payment on such check or electronic payment. If 

the Fund Administrator is unable to find a Payee’s correct address or payment information, the 

Fund Administrator, in her discretion, may remove such Payee from the distribution and the 

allocated Distribution Payment will remain in the Fair Fund for distribution, if feasible, to the 

remaining Payees.

50. The Fund Administrator will reissue checks or electronic payments to Payees 

upon the receipt of a valid, written request from the Payee if prior to the stale date of the original 

check. In cases where a Payee is unable to endorse a Distribution Payment check as written 

(e.g., name changes, IRA custodian changes, or recipient is deceased) and the Payee or a lawful 

representative requests the reissuance of a Distribution Payment check in a different name, the 

Fund Administrator will request, and must receive, documentation to support the requested 

change. The Fund Administrator will review the documentation to determine the authenticity 

and propriety of the change request. If, in the discretion of the Fund Administrator, such change 

request is properly documented, the Fund Administrator will issue an appropriately redrawn 

Distribution Payment to the requesting party. Reissued checks will be void one year after the 

date of reissuance, and in no event will a check be reissued after the stale date of the original 

check without good cause found by the Fund Administrator. 

51. The Fund Administrator will work with OFM and maintain information about 

uncashed checks and any returned items due to non-delivery, insufficient addresses, and/or other 

deficiencies. The Fund Administrator, working with OFM, is responsible for researching and 

reconciling errors and reissuing payments when possible. The Fund Administrator, working with 

OFM, is also responsible for accounting for all payments. The amount of all uncashed and 

undelivered payments will continue to be held in the Fair Fund. 

52. The Fund Administrator will make and document its best efforts to contact Payees 

to follow-up on the status of uncashed distribution checks (other than those returned as 

“undeliverable”) and returned electronic payments, and take appropriate action to follow-up on 

the status of such uncashed checks and returned payments. The Fund Administrator may reissue 

such payments, subject to the time limits detailed herein.

53. At the discretion of the Fund Administrator, certain costs that were not factored 

into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s 

Distribution Payment. In such situations, the Fund Administrator will immediately notify the 

Tax Administrator of the reduction in the Distribution Payment.
10

Receipt of Additional Funds

54. Should any additional funds be received pursuant to Commission or Court order, 

agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will 

be added to the Fair Fund and distributed, if feasible, in accordance with the Plan and pursuant to 

the Commission’s Rules.

Disposition of Undistributed Funds

55. If funds remain following the initial distribution and payment of all 

Administrative Costs, the Fund Administrator may seek subsequent distribution(s) of any 

available remaining funds, pursuant to the Commission’s Rules. All subsequent distributions 

shall be made in a manner that is consistent with this Plan. 

56. A residual within the Fair Fund will be established for any amounts remaining 

after the final disbursement to Payees from the Fair Fund and the payment of all Administrative 

Costs (the “Residual”). The Residual may include funds from, among other things, amounts 

remaining in the Reserve, distribution checks that have not been cashed, checks or electronic 

payments that were not delivered or were returned to the Commission, and tax refunds for 

overpayment of taxes or for waiver of IRS penalties.

57. All funds remaining in the Residual that are infeasible to distribute to investors 

will be transferred to the U.S. Treasury, subject to Section 21F(g)(3) of the Securities Exchange 

Act of 1934 (the “Exchange Act”), after the final accounting is approved by the Commission. 

Administrative Costs

58. All Administrative Costs will be paid from the Fair Fund in accordance with the 

Commission’s Rules. 

Accountings

59. When all funds have been disbursed, except for the Residual described in 

paragraph 56, the Fund Administrator will submit a final accounting pursuant to Rule 1105(f) of 

the Commission’s Rules, 17 C.F.R. § 201.1105(f), for the Commission’s approval prior to 

termination of the Fair Fund and discharge of the Fund Administrator. Since the funds are being 

held in a Commission designated account at the U.S. Treasury and the Fund Administrator is a 

Commission employee, no interim accountings will be made.

Termination of the Fair Fund

60. The Fair Fund will be eligible for termination and the Fund Administrator will be 

eligible for discharge after all of the following have occurred (a) a final accounting, in a standard 

accounting format provided by the Commission staff, has been submitted by the Fund 

Administrator and approved by the Commission; and (b) all Administrative Costs have been 

paid. Once the Commission has approved the final accounting, the Commission staff will seek 
11

an order from the Commission authorizing: (a) the transfer of the Residual that is infeasible to 

return to investors, and any amounts returned to the Fair Fund in the future that is infeasible to 

return to investors, to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the 

Exchange Act; (b) discharge of the Fund Administrator; and (c) termination of the Fair Fund.

VII. NOTICE OF PROPOSED PLAN AND OPPORTUNITY FOR COMMENT 

61. The Notice of the Proposed Plan of Distribution and Opportunity for Comment 

(the “Notice”) shall be published on the Commission’s website 

http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan 

must do so in writing by submitting their comments within thirty (30) days of the date of the 

Notice (a) to the Office of the Secretary, United States Securities and Exchange Commission, 

100 F Street, N.E., Washington, D.C. 20549-1090; (b) by using the Commission’s Internet 

comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending an e-mail to rulecomments@sec.gov. Comments submitted by e-mail or via the Commission’s website should 

include “Administrative Proceeding File No. 3-20381 in the subject line. Comments received 

will be publicly available. Persons should only submit comments that they wish to make 

publicly available.
2

Exhibit A

PLAN OF ALLOCATION

This Plan of Allocation is designed to compensate investors who held advisory accounts 

at the Respondent during the period November 1, 2014 through March 31, 2018, inclusive (the 

“Relevant Period”) and who suffered a loss as a result of the misconduct described in the Order. 

Based upon information obtained by the Commission staff during and after its investigation and 

the review and analysis of those records, the Fund Administrator has identified those investors, 

or their lawful successors, who held advisory accounts at the Respondent during the Relevant 

Period and who may have suffered losses as a result of the misconduct described in the Order

(the “Preliminary Claimants”). 

Each Preliminary Claimant’s Recognized Loss will be calculated as follows: 

1. For the Initial Balance, calculate the time value of money by applying to the Initial 

Balance the Short-term Applicable Federal Rate plus three percent (3%), 

compounded quarterly, from the start of the calendar quarter following the start of 

the Relevant Period to the end of the Relevant Period;

2. For each Investment,

1

calculate the time value of money by applying to the 

Investment the Short-term Applicable Federal Rate plus three percent (3%), 

compounded quarterly, from the start of the calendar quarter following the date of 

the Investment to the end of the Relevant Period; 

3. For each Recovery during the Relevant Period, calculate the time value of money 

by applying to the Recovery the Short-term Applicable Federal Rate plus three 

percent (3%), compounded quarterly from the start of the calendar quarter 

following the date of the Recovery to the end of the Relevant Period. 

4. Sum the Initial Balance, its associated time value of money amount, and all 

Investments and their associated time value of money amounts (“Aggregate 

Adjusted Investment”); 

5. Sum all Recoveries and their associated time value of money amounts (“Aggregate 

Adjusted Recovery”); and

6. Calculate the Preliminary Claimant’s Recognized Loss as his, her or its Aggregate 

Adjusted Investment minus Aggregate Adjusted Recovery. 

If the Recognized Loss calculates to a negative number, reflecting a gain, then the 

Recognized Loss will be $0.00.

 

1

 All capitalized terms not defined in this Plan of Allocation shall have the same meanings as in the Plan. 
3

Any Preliminary Claimant who suffered a Recognized Loss pursuant to this Plan of 

Allocation, and who is not an Excluded Party or an Unresponsive Preliminary Claimant will be 

deemed an Eligible Claimant.

Additional Provisions

Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of 

Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will 

equal his, her or its Recognized Loss, plus “Reasonable Interest” if applicable. If the Net 

Available Fair Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each 

Eligible Claimant’s distribution amount will equal his, her or its “Pro Rata Percent” of the Net 

Available Fair Fund (and no Reasonable Interest). In either case, the distribution amount will be 

subject to the “Minimum Distribution Amount.”

Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all Eligible 

Claimants his, her, or its Recognized Losses in full, the Fund Administrator, in consultation with the 

Commission staff, may include interest in the distribution amount to compensate Eligible Claimants for 

the time value of their respective Recognized Losses. Reasonable Interest will be calculated using the 

Short-term Applicable Federal Rate plus three percent (3%), compounded quarterly from the end of the 

Relevant Period through the approximate date of the disbursement of the funds. If there are insufficient 

funds to pay Reasonable Interest in full to all Eligible Claimants, each Eligible Claimant’s Reasonable 

Interest amount will be equal to his, her or its Pro Rata Percent of the excess funds.

Pro Rata Percent: A Pro Rata Percent computation is intended to measure Eligible Claimants’ 

Recognized Losses against one another. The Fund Administrator shall determine each Eligible 

Claimant’s Pro Rata Percent as the ratio of his, her, or its Recognized Loss to the sum of Recognized 

Losses of all Eligible Claimants.

Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00

(inclusive of Reasonable Interest, if any). If an Eligible Claimant’s distribution amount is less 

than the Minimum Distribution Amount, that Eligible Claimant will be deemed ineligible to 

receive a Distribution Payment and his, her, or its distribution amount will be reallocated on a 

pro-rata basis to Eligible Claimants whose distribution amounts are greater than or equal to the 

Minimum Distribution Amount. 

Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum 

Distribution Amount will be deemed a Payee and receive a Distribution Payment equal to his, 

her, or its distribution amount. In no event will a Payee receive from the Fair Fund more than 

his, her, or its Recognized Loss, plus Reasonable Interest, if applicable.