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January 30, 2013

Accountant Who Misused "Soft Dollars" Suspended from Practicing Before the SEC

By Amanda Maine, J.D.

The Securities and Exchange Commission ordered that Lisa B. Hovan, a certified public accountant, be suspended from appearing or practicing before the Commission as an accountant. The Commission also barred her from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization with the ability to request reinstatement by the Commission after five years. The Commission's order follows a final judgment which was entered against her on January 14, 2013.

As party to the civil action SEC v. Kurt Hovan, et al, Lisa B. Hovan was permanently enjoined from future violations of certain federal securities laws and ordered to pay a $50,000 civil money penalty for the improper use of "soft dollars" with her husband, Kurt Hovan, through their Commission-registered investment adviser firm Hovan Capital Management (HCM), of which Lisa B. Hovan was a member, indirect owner, and Chief Financial Officer. The Commission's complaint alleged that the Hovans had used soft dollars obtained as rebates on commissions paid for securities trades executed in the accounts of their clients for HCM's rent, salaries, and office equipment. The use of the soft dollars for these expenses was contrary to HCM's assurances to its clients that the soft dollars would only be used to pay for a limited category of services that benefited their clients. Lisa B. Hovan had also certified to an HCM client that soft dollars had not been used to pay for items other than research that would benefit the client, according to the Commission.

Companies: Hovan Capital Management

LitigationEnforcement: InvestmentAdvisers

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