Broadway Strategic Return Fund Managing Partners Subject Of SEC Enforcement Action
On September 1, 2022 the Securities and Exchange Commission (SEC) announced through a press release that the commission had filed an enforcement action against the managing partners of Broadway Strategic Return Fund, LP, Curtis Wayne Cronin and John Joseph. The action seeks an order directing Cronin and Joseph to comply with subpoenas for documents and testimony.
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Broadway Strategic Return Fund, LP is a fund “that invests in securities related to theatrical productions”, according to the press release.
The SEC’s enforcement action was filed in U.S. District Court for the Southern District of New York. The SEC is investigating whether Joseph, Cronin, or others made materially misleading statements about the valuation of fund assets to prospective or existing investors.
The SEC had begun a formal investigation of the fund and is investigating whether due diligence questionnaires sent to investors and prospective investors contained false representations that there had not been investigations into the fund or its partners.
SEC staff had served Cronin and Joseph with investigative subpoenas requiring them to produce documents and compelling their testimony. The commission’s filing states that Cronin and Joseph refused to produce documents or comply with obligations to testify even after multiple attempts to get them to comply.
The SEC is seeking “an order from the court directing Cronin and Joseph to show cause why the court should not compel them to appear for testimony and produce documents as required by the subpoenas.” The SEC’s application also seeks an order from the court directing Cronin and Joseph to comply with the subpoenas.
Regulation D Private Placements
Public records show Broadway Strategic Return Fund is a Regulation D private placement exempted from registration. Unregistered private placements may involve higher returns and much higher risks compared to registered securities, making them unsuitable for many investors’ risk tolerance.
Private placements do not have the same protections and disclosures that registered, publicly-traded securities have, and many are illiquid, meaning they can’t be easily sold. Investors in private placements may need to be accredited and able to afford to lose their entire investment and recover from it.
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