Dolphin Associates III, LLC, Donald T. Netter

At ChapmanAlbin LLC, we remain committed to informing investors about potential misconduct within the financial sector. In the latest development, the Securities and Exchange Commission (SEC) has filed charges against Connecticut-based Dolphin Associates III, LLC, and its principal, Donald T. Netter. The charges involve allegations of withholding investor withdrawals, charging excessive fees, and providing misleading information to investors.

Background of the Allegations

According to the SEC’s complaint, filed in the United States District Court for the District of Connecticut, Dolphin and Netter engaged in activities that violated multiple provisions of the Investment Advisers Act of 1940. Since November 2016, Dolphin and Netter are alleged to have improperly suspended investor withdrawals from a private fund they managed (the “Fund”), while simultaneously causing the Fund to make long-term investments in small-cap equities.

The complaint further alleges that Netter failed to disclose a critical conflict of interest: he personally owned the same securities held by the Fund and had an incentive to prevent the Fund from divesting these investments. This lack of transparency raises serious concerns about fiduciary responsibility and investor trust.

Specific Violations

The SEC’s complaint outlines several key violations by Dolphin and Netter, including:

1. Improper Suspension of Withdrawals: Investors were allegedly unable to access their funds while the Fund made illiquid, long-term investments.
2. Failure to Disclose Conflicts of Interest: Netter’s ownership of the same securities held by the Fund created a significant conflict of interest that was not disclosed to investors.
3. Excessive Fees: Dolphin and Netter are accused of charging the Fund excessive fees, further eroding investor confidence and returns.
4. Non-Compliance with Organizational Documents: The SEC alleges that Dolphin and Netter failed to obtain annual audits and distribute financial reports as required by the Fund’s governing documents.
5. Misleading Investors: Dolphin and Netter made materially misleading statements about the Fund’s liquidity and their efforts to return money to investors, compounding the financial harm suffered by investors.

SEC’s Enforcement Actions

The SEC’s complaint charges Dolphin and Netter with violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, as well as Rule 206(4)-8 under the Act. These provisions are designed to protect investors from fraudulent practices and ensure transparency in the management of investment funds.

To address these violations, the SEC is seeking:

• Injunctive Relief: Preventing Dolphin and Netter from engaging in further violations of securities laws.
• Disgorgement: Requiring Dolphin and Netter to return ill-gotten gains, plus prejudgment interest.
• Civil Monetary Penalties: Imposing financial penalties to deter future misconduct.

What This Means for Investors

The allegations against Dolphin Associates III, LLC, and Donald T. Netter highlight the importance of vigilance in selecting investment advisers and fund managers. Investors must perform thorough due diligence, seek full transparency, and be aware of potential conflicts of interest. This case also underscores the value of regulatory oversight in protecting investor rights.

How We Can Help

If you or someone you know invested in the Fund managed by Dolphin Associates III, LLC, and experienced financial losses, you may have legal options to recover your investments. At ChapmanAlbin LLC, our experienced attorneys specialize in securities arbitration and litigation. We are dedicated to holding financial professionals accountable for misconduct and helping investors seek justice.

For a free case evaluation and to learn more about your rights, please contact our team today. Let us help you navigate the complexities of securities law and work towards recovering your losses.

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