As it polices the seedy underbelly of Wall Street, the Securities and Exchange Commission is taking on financial wrongdoers of all sorts, including the Amish.
The SEC announced a deferred prosecution agreement Wednesday with the Amish Helping Fund, a not-for-profit organization that provides home loans to Amish families in Ohio.
The Amish financiers allegedly misled investors by failing to update the fund's offering memorandum, which was drafted when it was founded by a group of "elders" in 1995.
While neglecting to update financial documents for 15 years is a violation of securities law, the SEC said it did not find any evidence that investors were harmed or lost money. Under the terms of the deferred prosecution agreement, the SEC will not seek an enforcement action against the Amish, who agreed to update the fund's documents.
The New York lawyer representing the Amish, John Carney at Baker Hostetler, said the SEC recognized that the disclosure issues did not result in any investor losses. The fund "appreciates" the SEC's discretion in resolving the matter without bringing a formal enforcement action, Carney said in a statement.
There is something ironic about this. But first off, the Amish have an investment fund?
Apparently, yes. The AHF has sold financial contracts to some 3,500 investors that it used to back $125 million in mortgages to 1,200 Amish borrowers, according to the SEC.
Secondly, is it surprising that an investment fund run by Amish, who reject the trappings of modernity and embrace a deeply simple way of life, would be behind on paperwork?
Still, rules are rules.
SEC chief enforcer Robert Khuzami praised the Amish for quickly agreeing to amend the "misleading statements" and take other steps "to prevent future violations of the securities laws."
"Cooperation provides real and substantial benefits for companies that respond appropriately to the discovery of wrongdoing in their ranks," said Khuzami.
The SEC has entered a number of deferred prosecution agreements since it began making these sorts of deals in 2010.
The goal is to "facilitate and reward cooperation in SEC investigations," according to the Commission. But critics say the agreements allow securities law-breakers to avoid prosecution.
In any event, it seems strange that the SEC would use such a controversial agreement to settle a relatively minor violation by a quasi-religious group that did not result in any losses. Especially at a time when malfeasance is running amok on Wall Street.
|Martin Shkreli fraud trial begins next week|
|With cameras banned, CNN sends sketch artist to White House briefing|
|Drugmaker fined $100 million for hiking price of drug for infants 85,000%|
|Silicon Valley rocked by sexual harassment claims|
|SeaWorld subject of federal probes related to CNN's 'Blackfish' documentary|