9.15.2009 The SEC initiated administrative proceedings against KHF Advisors, LLC, an SEC-registered investment adviser created and controlled by Knox H. Fuqua, a Charleston, West Virginia-based investment adviser, to seek appropriate remedial action against it. The SEC alleged that Fuqua and KHF Advisors misappropriated client funds, ignored their clients’ instructions not to put their funds in high-risk investments, and materially misrepresented the nature and risk of the investments they made with their clients’ money. Fuqua and KHF Advisors allegedly used their clients’ money to pay Fuqua’s personal and business expenses and to repay other clients whose money they had wrongfully taken. KHF Advisors failed to appear in federal court and answer the charges. A default judgment was entered against it—on which the SEC’s current action is based.
Click http://www.sec.gov/litigation/admin/2009/ia-2924.pdf to access the order. Click http://www.sec.gov/litigation/admin/2009/ia-2925.pdf to access the SEC’s order against Appalachian Asset Management, Inc., based on similar allegations.