ADMINISTRATIVE PROCEEDING
File No. 3-21807

December 1, 2023 - The Securities and Exchange Commission today announced that New York-based investment adviser Eagan Capital Management, LLC ("ECM") agreed to settle charges related to its failure to comply with Commission rules designed to protect advisory clients from the misuse or misappropriation of their assets and for failure to adopt and implement reasonably designed written policies and procedures to prevent such violations.

Registered investment advisers that have custody of client assets are subject to the "custody rule," which requires the advisers to undergo an annual surprise examination to verify the existence of assets or, where permissible, to distribute to investors, within 120 days of each fiscal year end, annual audited financial statements for the fund prepared in accordance with generally accepted accounting principles. According to the SEC's order, ECM violated the custody rule in two respects related to Rochester 153, LLC and Verity Investments, LLC (collectively, the "REOC Funds") in which ECM's other advisory clients invested. First, from at least 2018 through 2021, ECM had custody of certain ECM clients' membership interests in the REOC Funds but failed to comply with the surprise examination requirement. Second, from at least 2018, ECM had custody of the REOC Funds' funds and securities but did not comply with the surprise examination requirement or the audited financials alternative. ECM also failed to comply with the requirement that every investment adviser registered with the Commission adopt and implement written policies and procedures reasonably designed to prevent violations concerning the custody of client funds and securities.

The SEC's order finds that ECM willfully violated Section 206(4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rules 206(4)-2 and 206(4)-7 thereunder. Without admitting or denying the findings, ECM consented to a cease-and-desist order and censure, agreed to pay a $50,000 penalty, and agreed to comply with undertakings pursuant to which ECM shall, among other things, hire an independent compliance consultant, not unacceptable to the staff, to conduct a comprehensive review and assist ECM in developing written compliance policies and procedures designed to promote ECM's compliance with the Advisers Act with respect to the custody of client funds and securities.

The SEC's investigation was conducted by Suzanne M. Bettis and Steven G. Rawlings under the supervision of Tejal D. Shah. The SEC examination that led to the investigation was conducted by Anthony P. Fiduccia, Kristine E. Geissler, Todd Naznitsky, and Merryl Hoffman.

• Order - Eagan Capital Management, LLC