The SEC has charged an adviser that sub-advised a mutual fund for mis-using soft dollar credits in a fraudulent scheme to pay rent and salaries.  The SEC charges the Defendants with creating a shell company and fake research reports to induce brokerage firms to pay soft dollar credits to the principal's brother.  The brother, according to the SEC, funneled money back to the Defendant to pay rent.  In a related scheme, the Defendant induced a third-party consultant to kick back money a technology provider.  The SEC charges that the Defendant lied to SEC examiners and created documents in response to information requests.

OUR TAKE: Credit goes to the SEC for uncovering this fraud.  It is very difficult to detect outright fraud where the perpetrator outright lies in response to questions and creates false documents to conceal the fraud (See Madoff).