On February 24, 2020 (“LSV” or “Respondent”), an Adviser to private funds reporting $150mm in regulatory assets. Lone Star, while reporting to the Commission as an exempt reporting investment adviser, effected 19 interfund cross trades between two funds Lone Star managed, and, in June 2015, while registered with the Commission as an investment adviser, effected 2 trades between a fund Lone Star managed and a separately managed account (the “SMA”) for which Lone Star served as an investment adviser. These 21 trades were made on a principal basis because the firm’s ownership level in the Lone Star fund involved in each of these trades was more than 35% during the relevant time period. Lone Star failed to disclose in writing that it engaged in these principal transactions and did not obtain client consent before the completion of each of the transactions as required under Section 206(3) of the Advisers Act. Eberwein, Lone Star’s sole and managing member, CEO, portfolio manager and sole owner, caused Lone Star’s violations of Section 206(3) of the Advisers Act.
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