Peachcap Tax & Advisory, Llc

Allegations: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT"), SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTIONS 203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AND SECTION 9(B) OF THE INVESTMENT COMPANY ACT OF 1940 ("INVESTMENT COMPANY ACT") AGAINST PEACHCAP TAX & ADVISORY, LLC ("PCTA") AND DAVID H. MILLER ("MILLER") (COLLECTIVELY, "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE FROM VIOLATIONS OF THE FEDERAL SECURITIES LAWS BY MILLER AND HIS SEC-REGISTERED INVESTMENT ADVISORY FIRM, PCTA. FIRST, BETWEEN MAY 2016 AND OCTOBER 2016, MILLER OFFERED AND SOLD TO CERTAIN OF HIS ADVISORY CLIENTS AND OTHERS OVER $4.6 MILLION IN LIMITED PARTNERSHIP INTERESTS IN THE PESSEGO LONG SHORT FUND, LP (THE "FUND"), A HEDGE FUND FORMED BY MILLER IN APRIL 2016. THE FUND'S OFFERING DOCUMENTS AND OTHER MATERIALS PROVIDED TO PROSPECTIVE INVESTORS CLAIMED THAT THE FUND SOUGHT TO "GENERATE ATTRACTIVE RISK-ADJUSTED RETURNS ACROSS ALL MARKET ENVIRONMENTS WHILE PRESERVING CAPITAL," AND THAT THE FUND "UTILIZE[D] A FUNDAMENTAL LONG/SHORT EQUITY APPROACH THAT TARGETS A LOW NET EXPOSURE AS ITS PRINCIPAL INVESTMENT STRATEGY." IN REALITY, HOWEVER, THE FUND ENGAGED IN RISKY TRADING FROM THE OUTSET THAT WAS INCONSISTENT WITH ITS STATED OBJECTIVES AND STRATEGIES. MOREOVER, IN SOLICITING INVESTORS, MILLER RECOMMENDED THE FUND TO CERTAIN PCTA ADVISORY CLIENTS, INCLUDING SOME CLIENTS FOR WHOM THE FUND WAS AN UNSUITABLE INVESTMENT. THE FUND, WHICH BEGAN TRADING IN MAY 2016, LOST MORE THAN 90 PERCENT OF ITS VALUE BEFORE CLOSING IN DECEMBER 2017. SECOND, BETWEEN MAY 2017 AND JUNE 2018, PCTA ENGAGED IN 492 PRINCIPAL TRADES WITH 6 ADVISORY CLIENTS WITHOUT PROVIDING THE REQUISITE TRANSACTION-SPECIFIC NOTICE OR OBTAINING CONSENT. PCTA ALSO DID NOT ADOPT AND IMPLEMENT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH THESE PRINCIPAL TRADES. FINALLY, PCTA DID NOT ADOPT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REGARDING VOLATILITY-LINKED EXCHANGE-TRADED PRODUCTS, WHICH RESULTED IN PCTA'S INVESTMENT ADVISER REPRESENTATIVES ("IARS") USING THEIR DISCRETIONARY AUTHORITY OVER CLIENT ACCOUNTS TO BUY AND HOLD A COMPLEX LEVERAGED EXCHANGE TRADED FUND ("LEVERAGED ETF") FOR RETAIL CLIENTS FOR TIME PERIODS THAT WERE INCONSISTENT WITH THE PURPOSE OF THE PRODUCT AS DESCRIBED IN ITS OFFERING MATERIALS, SUBJECTING ITS CLIENTS TO UNREASONABLE RISK OF LOSS. Status: Final Sanction Detail: PCTA WAS ORDERED TO PAY DISGORGEMENT OF $3,054.74, PREJUDGMENT INTEREST OF $759.35, AND CIVIL PENALTIES OF $135,000 TO THE SEC. MILLER WAS ORDERED TO PAY $65,000 IN CIVIL PENALTIES TO THE SEC. Summary: PEACHCAP TAX & ADVISORY, LLC AND DAVID H. MILLER, INV. ADV. ACT REL. NO. 5935 (DECEMBER 22, 2021) - IN THIS PARTICULAR ENFORCEMENT ACTION, PEACHCAP TAX & ADVISORY, LLC ("PCTA") AND ITS FORMED PRINCIPAL, DAVID H. MILLER ("MILLER"), WERE CITED FOR, AMONG OTHER THINGS, SENDING A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM ("PPM") WITH MATERIAL MISREPRESENTATIONS AND OMISSIONS AND FOR ENGAGING IN VARIOUS HIGH-RISK TRADING STRATEGIES INCONSISTENT WITH ITS STATED OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGY. ADDITIONALLY, THE SEC FOUND PCTA ENGAGED IN PRINCIPAL TRADES WITH ADVISORY CLIENTS WITHOUT PROVIDING THE REQUISITE TRANSACTION-SPECIFIC NOTICE OR OBTAINING CONSENT. PCTA ALSO DID NOT ADOPT AND IMPLEMENT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH THE PRINCIPAL TRADES. LASTLY, PCTA DID NOT ADOPT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REGARDING VOLATILITY-LINKED EXCHANGE-TRADED PRODUCTS, WHICH RESULTED IN PCTA'S INVESTMENT ADVISER REPRESENTATIVES ("IARS") USING THEIR DISCRETIONARY AUTHORITY OVER CLIENT ACCOUNTS TO BUY AND HOLD COMPLEX LEVERAGED EXCHANGE FUNDS ("LEVERAGED ETF") FOR RETAIL CLIENTS FOR TIME PERIODS THAT WERE INCONSISTENT WITH THE PURPOSE OF THE PRODUCT AS DESCRIBED IN ITS OFFERING MATERIALS. AS A RESULT, THE SEC STATED WILLFUL VIOLATION OF SECTION 17(A)(3) OF THE SECURITIES ACT, SECTIONS 206(2), 206(3), 206(4) AND RULES 206(4)-7 AND 206(4)-8 THEREUNDER OF THE ADVISERS ACT AND, CENSURED PCTA, AND BARRED MILLER FROM ACTING AS A BROKER OR INVESTMENT ADVISER OR OTHERWISE ASSOCIATING WITH FIRMS THAT SELL SECURITIES OR PROVIDE INVESTMENT ADVICE TO THE PUBLIC. PCTA WAS ORDERED TO PAY DISGORGEMENT OF $3,054.74, PREJUDGMENT INTEREST OF $759.35, AND CIVIL PENALTIES OF $135,000 TO THE SEC. MILLER WAS ORDERED TO PAY $65,000 IN CIVIL PENALTIES TO THE SEC. MILLER CONTROLLED PCTA'S OPERATIONS DURING THE TIME PERIOD RELEVANT TO THIS ACTION, AND HE WAS ORDERED TO DIVEST HIS INTERESTS IN AND TO HAVE NO RESPONSIBILITIES WITH PCTA AND OTHER REGULATED ENTITIES.