In the Matter of Apex Fund Services (US), Inc.
Admin. Proc. File No. 3-17300
On June 16, 2016, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against Apex Fund Services (US), Inc. (“Apex”). The Commission found that, from May 2012 through June 2014, Apex served as the fund administrator providing accounting and fund administration services to two private funds managed by EquityStar Capital Management, LLC and Steven Zoernack (collectively, the “Managers”): the Momentum Growth Fund, LLC and the Global Partners Fund, LLC (collectively, the “Funds”). According to the Order, the Managers made undisclosed withdrawals of more than $1 million directly from the Funds in violation of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 (the “Advisers Act”) and Rule 206(4)-8 thereunder. The Commission found that Apex improperly classified these withdrawals as receivables without evidence that the Managers were able or willing to repay the withdrawals. The Commission further found that the improper classification of the withdrawals as assets resulted in the overstatement of the value of investor holdings in monthly statements sent by Apex to investors. The Commission determined that, by this conduct, Apex was a cause of the Managers’ violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. The Commission ordered Apex to disgorge $89,050, and to pay prejudgment interest of $7,786, and a civil penalty of $75,000, for a total payment of $171,836. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalty, along with the disgorgement and interest, collected can be distributed to those harmed by the Respondent’s conduct described in the Order. See the Commission’s Order: Release No. IA-4429.
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