The SEC brought related enforcement actions against an investment adviser to a registered investment company ("RIC") (MH Investment Management, Inc.) and a solo practitioner accountant (John Michaels, CPA) to the fund it advises (MH Elite Portfolio of Funds Trust, Inc.) for auditor independence violations. According to the SEC order, the accountant was not in compliance with auditor independence rules established by the SEC and the Public Company Accounting Oversight Board (“PCAOB”) because his wife held investments in the fund. Investment Company Act Section 30(a) requires RICs to file financial statements certified by an independent public accountant. Regulation S-X provides: “An accountant is not independent if, at any point during the audit and professional engagement period, the accountant has a direct financial interest or a material indirect financial interest in the accountant’s audit client, such as: (i) Investments in Audit Clients. An accountant is not independent when: (A) The accounting firm, any covered person in the firm, or any of his or her immediate family members [including a person's spouse], has any direct investment in an audit client….” The SEC noted that the adviser was aware of the wife's investment in the fund but failed to inform the fund board, which approved the engagement of the auditor. Accordingly, the adviser caused the fund to file an inaccurate annual report on Form N-CSR, which incorrectly described the accountant's firm as "independent with respect to the Funds." The SEC further charged Michaels with failure to comply with other PCAOB audit standards because (1) he did not communicate with the predecessor auditor before accepting the engagement, (2) he did not appropriately document his audit work, and (3) there was no engagement quality review and concurring issuance approval of the audit. The adviser agreed to a $10,000 penalty, and the accountant agreed to a 3-year bar from appearing or practicing as an accountant before the SEC. This case serves as a reminder of the importance of conducting and complying with requests related to independence assessments, which extend to family member investment activities. See https://www.sec.gov/files/litigation/admin/2025/ic-35810.pdf and https://www.sec.gov/files/litigation/admin/2025/34-104241.pdf.