U.S. Securities and Exchange Commission Litigation Release No. 26286, dated April 15, 2025.
The SEC amended its complaint against an investment adviser and its firm for fraud. They allegedly continued to over-concentrate a mutual fund's assets in a single company and industry, violating a previous settlement and causing $1.6 million in losses. The defendants also allegedly withheld information from the fund's board and hired an accountant without proper board approval.
In Plain English
Imagine you have a piggy bank for your friends, and you promised to only put a little bit of money into any one toy company's stock. But you kept putting way too much money into one company, even after being told to stop. This caused your friends to lose money when that company's stock dropped. You also didn't tell your friends' parents (the board) important things about how you were managing the money.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Fund's Strict Investment Rule David Yow Shang Chiueh and his firm, Upright Financial Corp., managed the Upright Growth Fund. Since 1998, the fund had a strict rule: never invest more than 25% of its assets in any single industry. This policy was disclosed to investors.
- First SEC Action and Settlement Between July 2017 and June 2020, Chiueh and Upright violated this 25% rule by concentrating assets in one industry, including semiconductors. They also committed fraud and breached their fiduciary duties. In November 2021, the SEC settled these charges with them.
- Promise to Stop, But Didn't As part of the settlement, Chiueh and Upright promised the SEC they would stop this conduct. However, the SEC's amended complaint alleges they continued their fraudulent scheme.
- Continued Over-Concentration From at least November 24, 2021, through September 29, 2023, the defendants allegedly invested more than 25% of the fund's assets in a single company, referred to as 'Company A'. This directly violated the fund's concentration policy.
- Industry Concentration Persists Even after September 29, 2023, the defendants allegedly continued to violate the concentration policy by keeping more than 25% of the fund's assets in the semiconductor industry, up to at least June 23, 2024.
- Misleading Investors and Board During this period, the defendants allegedly made misrepresentations about the fund's concentration. They also failed to provide key information to the fund's board of trustees and hired an accountant without the required board vote.
- Causing Investor Losses By waiting nearly two years to sell the concentrated stock (Company A) and continuing to over-concentrate in the semiconductor industry, the defendants caused losses of approximately $1.6 million to the fund and its investors.
- Collecting Fees on Over-Concentrated Assets While causing these losses, the defendants also collected approximately $100,000 in advisory fees on the fund's assets that exceeded the 25% concentration limit.
The Enforcement Action
The SEC filed an amended complaint on April 11, 2025, against David Yow Shang Chiueh and Upright Financial Corp. The amended complaint charges fraud and other violations, including continuing to invest more than 25% of a fund's assets in a single company and industry after settling prior SEC charges. This conduct allegedly caused $1.6 million in losses. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties. The initial complaint was filed on March 17, 2025.