The SEC recently levied a $200,000 fine on Colorado-based investment advisory firm First Western Capital Management Co. (“FWCM”) for buying hundreds of millions of dollars’ worth of securities for clients who weren’t qualified institutional buyers (“QIBs”).

The SEC’s July 16 order, says that from October 2010 through July 2017, FWCM purchased more than $666 million in securities – or 9.4% of the firm’s total securities – sold in reliance on Rule 144A, for 81 client accounts that weren’t qualified institutional buyers. Instead, the accounts were individuals, trusts, individual retirement accounts and small institutional accounts falling below the $100 million QIB threshold.

FWCM did have some supervisory policies and procedures in place during this period, according to the SEC’s order, but it failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act. It also didn’t adopt specific policies and procedures relating to Rule 144A securities. Moreover, FWCM didn’t require training for its investment adviser representatives (“IARs”) and supervisors about Rule 144A securities.

The SEC said the inappropriate purchases were “due to FWCM’s inadequate training, compliance policies and procedures and supervision.”

FWCM provides investment advisory services to individuals, charitable organizations, pension plans and corporations. During the 2010-17 period, FWCM provided advisory services to 651 advisory clients and employed nine IARs. As of the end of 2019, FWCM reported that it managed $962 million in assets and provided advisory services to 395 clients.