UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 97921 / July 17, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-19494

In the Matter of

HCR Wealth Advisors,

Respondent.

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NOTICE OF PROPOSED PLAN OF

DISTRIBUTION AND

OPPORTUNITY FOR COMMENT

Notice is hereby given, pursuant to Rule 1103 of the United States Securities and

Exchange Commission’s (the “Commission”) Rules on Fair Fund and Disgorgement Plans (the

“Commission’s Rules”), 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted

to the Commission a proposed plan of distribution (the “Proposed Plan”) for the distribution of

monies paid in the above-captioned matter.

On September 23, 2019, the Commission issued an Order Instituting Administrative and

Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment

Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-andDesist Order (the “Order”)1 against HCR Wealth Advisors (“HCR” or the “Respondent”). In the

Order, the Commission found that HCR failed to reasonably supervise Jeremy Joseph Drake

(“Drake”), formerly an investment adviser representative of HCR, and failed to implement

reasonable compliance-related policies and procedures in response to red flags about Drake’s

handling of client accounts. The Commission found that, from 2012 to July 2016, Drake

defrauded two HCR clients, a married couple, out of approximately $1.2 million in management

fees, approximately $900,000 of which Drake received as incentive-based compensation from

HCR. According to the Order, during the same period, Drake misappropriated approximately

$215,000 from the accounts of four HCR clients, including the married couple and two other

individuals, to support a struggling restaurant that was majority owned by the married couple and

in which Drake held a minority ownership interest.

The Commission ordered the Respondent to pay a civil money penalty of $220,000 to the

Commission. The Order provided that the Commission may distribute the civil money penalties

if, in its discretion, the Commission orders the establishment of a Fair Fund pursuant to 15

U.S.C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002.

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Advisers Act Rel. No. 5361 (Sept. 23, 2019).

The Respondent has paid a total of $220,000.00 pursuant to the Order.

Prior to entry of the Order, HCR paid the married couple $300,000. Drake also paid the

married couple $600,000 in partial satisfaction of a criminal restitution Order entered against

him. Drake additionally reimbursed the third client from the restaurant account that he

controlled. Further, in connection with the issuance of the Order, Respondent voluntarily

undertook to pay the married couple an additional $328,912.20, which fully compensated them

for their losses of $1.2 million resulting from Drake’s management-fee fraud. The fourth

individual, who was defrauded when Drake transferred $100,000 from her account to the

restaurant’s account, remains uncompensated.

On December 2, 2021, the Commission issued an order establishing a Fair Fund (the

“Fair Fund”), pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the civil money

penalty paid by HCR can be distributed to the remaining harmed investor.2

The assets of the Fair Fund are subject to the continuing jurisdiction and control of the

Commission. The Fair Fund has been deposited in a Commission-designated account at the U.S.

Department of the Treasury, and any interest accrued will be added to the Fair Fund.

OPPORTUNITY FOR COMMENT

Pursuant to this Notice, all interested persons are advised that they may obtain a copy of

the Plan from the Commission’s public website at http://www.sec.gov/litigation/fairfundlist.htm.

Interested persons may also obtain a written copy of the Proposed Plan by submitting a written

request to Nancy Chase Burton, United States Securities and Exchange Commission, 100 F

Street, NE, Washington, DC 20549-5876. All persons who desire to comment on the Proposed

Plan may submit their comments, in writing, no later than thirty (30) days from the date of this

Notice:

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to the Office of the Secretary, United States Securities and Exchange

Commission, 100 F Street, NE, Washington, DC 20549-1090;

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by using the Commission’s Internet comment form

(http://www.sec.gov/litigation/admin.shtml); or

3.

by sending an e-mail to rule-comments@sec.gov.

Comments submitted by email or via the Commission’s website should include “Administrative

Proceeding File No. 3-19494” in the subject line. Comments received will be publicly available.

Persons should submit only information they wish to make publicly available.

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Order Establishing a Fair Fund, Exchange Act Rel. No. 93706 (Dec. 2, 2021).

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THE PROPOSED PLAN

The Net Available Fair Fund3 is comprised of the $220,000.00 in civil money penalties

paid by the Respondent, plus interest and income earned thereon, less taxes, fees, and expenses.

The Proposed Plan provides for the distribution of the Net Available Fair Fund to the one

remaining harmed investor who suffered a Net Loss as a result of the conduct described in the

Order in accordance with paragraph 10 of the Proposed Plan.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.4

Vanessa A. Countryman,

Secretary

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All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Proposed

Plan.

4

17 C.F.R. § 200.30-4(a)(21)(iii).

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