On October 29, 2014, the SEC brought charges against Sands Brothers Asset Management, LLC; Steven Sands and  Martin Sands, the firm’s co-chairmen; and Christopher Kelly, the firm’s chief compliance officer and chief operating  officer, for violating Rule 206(4)-2 (the “custody rule”) under the Advisers Act by repeatedly failing to distribute audited  financial statements to the firm’s private fund investors within 120 days of the end of the fiscal year. The SEC’s order  alleges that Sands Brothers Asset Management willfully violated the custody rule and that Steven Sands, Martin  Sands and Christopher Kelly aided and abetted the violation. According to the SEC’s order, Sands Brothers Asset  Management and Steven Sands and Martin Sands were previously sanctioned by the SEC in 2010 for custody  rule violations.