On August 27, 2013, the SEC settled charges against Carl Johns, a former assistant portfolio manager with Boulder Investment Advisers, LLC (Boulder), for violations of Section 17(j) of the 1940 Act and Rules 17j-1(b), 17j-1(d) and 38a-1(c) thereunder. The SEC found that, from 2006 to 2010, Mr. Johns engaged in active personal trading in securities without pre-clearing or reporting a majority of his trades. The SEC found that Mr. Johns concealed his personal securities transactions by altering brokerage statements attached to quarterly and annual trading reports and falsely certifying to compliance with Boulder’s code of ethics.

The SEC’s order stated that, during the chief compliance officer’s investigation, Mr. Johns misled the chief compliance officer by creating false pre-clearance documents and backdating personal securities transactions. Mr. Johns agreed to pay disgorgement of $231,169, prejudgment interest of $23,889 and a civil monetary penalty of $100,000. Mr. Johns was also barred from the securities industry for at least five years. The settlement with Mr. Johns marks the first ever enforcement action by the SEC under Rule 38a-1(c), which prohibits an officer, director or employee of a fund or its investment adviser from taking any action to coerce, manipulate, mislead or fraudulently influence the fund’s chief compliance officer.