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UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 89013 / June 4, 2020 

ADMINISTRATIVE PROCEEDING

File No. 3-18324

In the Matter of

TRAIN, BABCOCK ADVISORS LLC,

Respondent.

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ORDER DIRECTING PAYMENT OF 

CERTAIN FUNDS RECEIVED BY THE 

COMMISSION AND DIRECTING 

TRANSFER OF REMAINING FUNDS TO 

THE U.S. TREASURY

On December 22, 2017, the Commission issued an Order1that simultaneously instituted 

and settled a cease and desist proceeding against Train, Babcock Advisors, LLC (the 

“Respondent”). These proceedings arise from misconduct by Train, Babcock Advisors LLC 

(“TBA”), an investment adviser registered with the Commission, in connection with certain client 

accounts for which TBA’s principals acted as trustee and over which TBA had custody. First, two 

principals of TBA misappropriated more than $10 million collectively from two TBA client 

accounts in separate fraudulent schemes that spanned 12 years. Second, TBA failed to comply 

with the requirements of Rule 206(4)-2 under the Advisers Act (the “Custody Rule”) because TBA 

failed to obtain surprise examinations for certain client accounts for which it had custody. Third, 

TBA failed to adopt and implement policies and procedures reasonably designed to prevent 

violations of the Advisers Act and its rules, particularly as to the safeguarding of client assets. 

Finally, TBA made false statements in a number of its Forms ADV filed with the Commission.

In the OIP, the Commission found that TBA willfully violated Section 10(b) of the 

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

the Advisers Act, Section 206(4) of the Advisers Act, and Rules 206(4)-2 and 206(4)-7 

promulgated thereunder, and Rule 207 of the Advisers Act. The Commission ordered the 

Respondent to pay disgorgement of $331,957, prejudgment interest of $33,768.23, and a civil 

money penalty in the amount of $1,335,000 to the Commission within 10 days of the entry of the 

OIP and created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002.

After receipt of the disgorgement, interest, and penalty amounts referenced above, the 

Commission staff will distribute a payment to the Kurr Foundation in the amount of the Fair 

 

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 See Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 21C of the Securities 

Exchange Act of 1934[,] 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, Exchange Act Rel. No. 82399 (Dec. 22, 2017) (the “OIP”).
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Fund minus a reserve for taxes and related administrative expenses.

The payment of disgorgement, prejudgment interest, and civil penalty constitutes a 

qualified settlement fund (“QSF”) under Section 468B(g) of the Internal Revenue Code (IRC), 26 

U.S.C. Section 468B(g), and related regulations, 26 C.F.R Sections 1.468B-1 through 1.468B-5. 

The Commission staff will seek the appointment of a tax administrator to establish a reserve for 

taxes and related administrative expenses. After establishing and withholding the reserve, the 

remaining amount in the Fair Fund will be transferred to the Kurr Foundation, the entity harmed 

by the conduct described above.

Accordingly, it is ORDERED that:

A. After the receipt of the funds simultaneously ordered in this proceeding, a 

tax administrator will be appointed to establish a reserve for taxes and 

administrative expenses.

B. After withholding the reserve amount, the remaining Fair Fund shall be disbursed 

to the Kurr Foundation.

C. Any undistributed funds will be remitted to the general fund of the United 

States Treasury subject to Exchange Act Section 21F(g)(3).

By the Commission.

Vanessa A. Countryman

Secretary