Published on Apr 11th, 2016 | Posted in Articles

The Securities and Exchange Commission today announced that Marshall S. Sprung, co-chief of the Division of Enforcement’s Asset Management Unit, is planning to leave the agency later this month.

As co-head of the unit for the past two-and-a-half years, Mr. Sprung has overseen a nationwide staff of nearly 80 attorneys, industry experts, and other professionals that investigates violations of the federal securities laws by investment advisers, registered funds, and private funds.  Co-Chief Anthony Kelly will continue to lead the unit following Mr. Sprung’s departure.

“Marshall has served as a thoughtful, creative, and driven co-chief of the Asset Management Unit,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division.  “He helped the unit grow its expertise and drove the unit’s data-driven approach that led to innovative and impactful cases involving asset managers and investment advisers.”

Mr. Sprung said, “It has been an honor to work with staff throughout the Division of Enforcement and the SEC who inspired me with their unwavering professionalism, skill and talent during my tenure at the agency.  I am particularly proud of my colleagues in the Asset Management Unit for their grit and dedication in ferreting out misconduct by investment advisers and developing the expertise needed to protect investors from fraud and other unlawful practices in the complex asset management industry.”

During his tenure as co-chief, Mr. Sprung oversaw investigations of investment advisers for various forms of misconduct involving valuation, disclosure, conflicts of interest, fund governance and the advisory contract approval process, trading practices, and compliance and controls.  He was instrumental in transforming the unit into an agency leader on leveraging data and designing risk-analytic initiatives in key priority areas, including private equity, mutual fund fee and revenue sharing, and aberrational private fund performance.  A hallmark of Mr. Sprung’s tenure was building a nationwide team within the Enforcement Division that developed expertise in the asset management industry and partnered with other SEC divisions and offices on examination sweeps, rulemakings, and more effective detection of emerging risks. 

Under Mr. Sprung’s supervision, the unit brought enforcement actions addressing misconduct in all of its priority areas.  Many of these actions were firsts of their kind and included charges against:

·         Kohlberg Kravis Roberts & Co. which paid nearly $30 million for misallocating more than $17 million in so-called “broken deal” expenses, which was the agency’s first action to address such conduct.

·         Three AIG affiliates which paid more than $9.5 million for steering mutual fund clients toward more expensive share classes so the firms could collect more fees.

·         Morgan Stanley Investment Management and one of its portfolio managers who paid nearly $9 million for unlawfully conducting “parking” trades that favored certain advisory client accounts over others that included an investment company.

·         Fenway Partners LLC and its principals who paid more than $10 million for failing to disclose conflicts of interest relating to consulting services provided by an affiliated entity and payments to former firm employees that were paid for with fund and portfolio company assets.

·         R.T. Jones Capital Equities Management, Inc. for failing to establish cybersecurity policies and procedures in advance of a breach by hackers that compromised confidential client data of approximately 100,000 individuals, including thousands of the firm’s clients.

·         J.S. Oliver Capital Management and its president for allegedly routing winning trades to favored clients and lying about payments using client assets, and against the firm’s broker-dealer Instinet for approving some of these payments.

Mr. Sprung joined the SEC in 2003 after working for five years as a litigation associate at Gibson, Dunn & Crutcher in Los Angeles, and serving as a law clerk to the Honorable A. Joe Fish on the U.S. District Court in Dallas.  He was promoted to branch chief in 2005, and in 2010 he was promoted to be an assistant director in the newly-formed Asset Management Unit.  In 2012, he was appointed co-deputy chief of the unit and was appointed co-chief in 2013.  Mr. Sprung received the SEC Chairman’s Award for Excellence in Leadership in 2015 and the Arthur F. Mathews Award in 2010.  Mr. Sprung received his J.D. from New York University School of Law in 1996 and his undergraduate degree with high honors from Brown University in 1993.