The Securities and Exchange Commission has ordered Driftwood Advisors to pay a $115,000 penalty for violations related to the Custody Rule.
According to the SEC's order, Driftwood Advisors had custody of the assets of its pooled investment vehicle clients.
However, for its fiscal years ended Dec. 31, 2021, and 2022, Driftwood Advisors failed to timely distribute audited financial statements prepared in accordance with generally accepted accounting principles to investors in pooled investment vehicles that it advised.
These failures resulted in violations of the rule, the order states.
"For fiscal years 2021 and 2022, with respect to the funds, Driftwood Advisors purported to rely on the Audited Financials Alternative in order to comply with the custody rule, but Driftwood Advisors failed to timely deliver the audited financials to the investors in the Funds," the SEC order states.
"Accordingly, Driftwood Advisors did not satisfy the requirements of the Audited Financials Alternative" in the custody rule.