Strongbrook and the Securities and Exchange Commission

Share Article

More than two years ago the SEC began an investigation into The Companies (TC), L.L.C. and all of its affiliated companies, including REIC. This a summary of the investigation and the outcome.

CEO Steve Earl said that "....we welcomed the opportunity to go under the SEC magnifying glass and ‘bare all’ as we are required to do under this honorable system of govern

More than two years ago the SEC began an investigation into The Companies (TC), L.L.C. and all of its affiliated companies, including REIC. The Companies (TC), L.L.C. is now doing business as The Strongbrook Group. For the rest of this statement The Companies (TC), L.L.C. will be referred to as Strongbrook. SEC investigations are confidential and Strongbrook cannot be certain as to what triggered this particular investigation. Many SEC investigations are prompted by complaints from disgruntled former employees and Strongbrook believes that is possibly what happened in this case. The SEC did its job and chose to investigate the allegations. http://youtu.be/9j7aZ_b7N-M

The SEC conducted it’s investigation from Fall 2010 – Spring 2012, and filed it’s official complaint August 7, 2012. The matter was settled days later.

Strongbrook cooperated fully in the investigation, and CEO Steve Earl said that, “Although participating in the investigation was expensive, and at times a distraction, we welcomed the opportunity to go under the SEC magnifying glass and ‘bare all’ as we are required to do under this honorable system of government.”

Strongbrook states that part of its philosophy is to be “authentic, transparent and honest.” Strongbrook has said, “We believe that our clients, investors, employees, and the public have a right to know how we conduct our business.” Subsequently, Strongbrook acknowledged the responsibility of the SEC to do its job to enforce all relevant laws and guidelines and promptly responded to all information requests. Strongbrook representatives have said they, “embraced the SEC inquiry as an opportunity to dispel any misconceptions or stereotypes that may have existed with anyone familiar with the company or any of its affiliated companies.”

The SEC inquiry was very rigorous and Strongbrook said, “we feel the SEC staff was very competent.” The SEC requested all relevant articles of information from each of the companies. CEO Steve Earl, stated that, “The volume of documents that were produced amounted to what looked like a small library!” The SEC staff conducted a very detailed and comprehensive review of all applicable documents, and conducted interviews with company principals, clients, and shareholders.

Once the review was completed to the satisfaction of SEC staff, Strongbrook and the SEC began to discuss a resolution that would allow Strongbrook to turn its full focus back to running its core business as quickly as possible. Brent Baker, SEC counsel for Strongbrook, said “that Strongbrook’s cooperation is evidenced by the fact that the SEC allowed them to settle this matter without admitting to any wrongdoing. In fact, the SEC’s Complaint does not allege intentional violations and that as part of the settlement, Strongbrook neither denies nor acknowledges any wrong doing.”

The terms of the settlement were as follows:

Strongbrook agreed to neither admit nor deny the SEC’s complaints against them.
Strongbrook agreed to a 3rd party audit.
Strongbrook agreed to pay the minimum fine required by law.
Strongbrook agreed to notify all of their investors of the outcome of the investigation.
Strongbrook agreed to provide a copy of the 3rd party audit to their investors and inform them that they have the right to seek rescission of their investment.

The settlement did not find Strongbrook guilty of any intentional wrongdoing and it did not place any additional restrictions on their future business activities.

Strongbrook president Kris Krohn said that he “believes firmly that with any challenge in life, there is the seed of an equal benefit and that the seed of benefit in this situation has grown over the last two years as we have learned through examination the utmost importance of absolute disclosure, complete compliance, and emphasis on understanding all applicable laws of doing business. Although we have been concerned with compliance and law from the outset of starting Strongbrook, this two-year experience has ingrained in our team the absolute requirement of dotting every ‘i’ and crossing every ‘t.’”

Strongbrook principles have said they believe they are a “wiser, smarter, stronger, and significantly more seasoned organization than [they] were two years ago.” President Kris Krohn has said, “Despite it’s nature, we are grateful to have had this experience and feel confident there is great purpose in it.”

Strongbrook’s core business of helping their clients purchase single family investment properties was not a main focus of the investigation and they continue to provide the same products and services their clients have come to appreciate before, during, and after the investigation. For more than 5 years Strongbrook has promoted itself as different from any other company and they maintain their clear directive: to help people learn and do real estate.http://youtu.be/9j7aZ_b7N-M

SEC v. The Companies, LLC, et al., 2:12-cv-00765
Consent TC Case 2:12-cv-00765-DN
SEC v. The Companies, LLC, et al., 2:12-cv-00765
http://archive.sltrib.com/article.php?id=22470828&itype=storyID Salt Lake Tribune, August 7, 2012

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Steve Earl
Visit website