In a litigated classic fraud case, aligned with the SEC's "back to basics" focus on investor harm and fiduciary duty, the SEC charged Jay S. Lucas and Lucas Brand Equity, LLC, an exempt reporting adviser (ERA) who raised more than $50 million from 2013-2025) in three private equity funds, with fraud for: 1) misrepresentations to investors in three private equity funds regarding fees and compensation, fund and portfolio company operations; 2) misappropriation at least $8 million of investor funds (tens of millions raised; millions allegedly diverted); 3) use of fund assets for personal expenses, real estate, and unrelated ventures; and 4) failure to disclose conflicts of interest and inaccurate disclosures regarding fund operations. Defendants were also charged with failing to reassess the fair value of multiple portfolio companies and apply write-downs when warranted, which would have resulted in a reduction of management fee. With respect to one portfolio company, after discovering what was internally referred to as "massive fraud" at a portfolio company, the firm nevertheless failed to write-down the investment, continuing to report the company at 4x-5x the amount invested. On December 18, 2025, in a parallel criminal action, the United States Attorney’s Office for the Southern District of New York announced an indictment charging Lucas with securities fraud, investment adviser fraud, wire fraud, and money laundering. ERAs are not routinely examined by the SEC but are not exempt from SEC enforcement actions, particularly those involving fraud and misappropriation.