Matthew Bruderman, investment firm agrees to $250,000 fine, SEC censure
Matthew Bruderman addresses the Nassau County Legislature in 2022. Credit: /Howard Schnapp
Matthew Bruderman of Centre Island and his investment company have agreed to a censure and a $250,000 fine from the U.S. Securities and Exchange Commission to settle charges he and his firm misused investor proceeds.
The SEC said the charges relate to $6.1 million Bruderman and Bruderman Asset Management LLC raised from 13 clients for three private entities in which Bruderman had an ownership stake or decision-making authority.
The SEC said Bruderman and his firm failed to tell clients their investments would be used temporarily for other purposes, including to fund Bruderman Asset's payroll and to repay loans owed to Bruderman or other companies with which he was affiliated. Bruderman and his firm did not admit to or deny any of the findings, according to a news release from the SEC.
The firm said the SEC order "speaks for itself" and prohibits further comment.
Bruderman is a major Republican donor and chairman of NuHealth, the public benefit corporation that runs the financially struggling Nassau University Medical Center in East Meadow.
The SEC said it reviewed the transactions of Bruderman Asset Management from February 2017 through August 2021.
The charges say Bruderman did not speak directly to his company's clients, but directed one of its investment advisers to "recommend the investments in Bruderman Affiliated Companies to BAM clients."
"Some money was temporarily employed to repay outstanding loans made to the Bruderman Affiliated Companies by Bruderman himself or intercompany loans among and between the Bruderman Affiliated Companies," according to the SEC charges. "Other monies were diverted for short periods of time before the monies were ultimately returned to the appropriate Bruderman Affiliated Company."
In one instance, in October 2018, a client made a $500,000 equity investment in a Bruderman-affiliated company. "Shortly thereafter, at Bruderman’s direction, $400,000 of this investment was transferred to Bruderman’s personal bank account to repay Bruderman for an outstanding loan of more than $1 million owed to him" by a company the charges did not identify, the SEC said.
The SEC said "Bruderman’s ownership interests, Board positions, decision-making authority, and the conflicts of interest they presented, were not disclosed to investment advisory clients."
"BAM, through Bruderman, also failed to implement reasonably designed written policies and procedures concerning the disclosure of conflicts of interest," the SEC said.
“Full disclosure of conflicts of interest is a central safeguard for investors who place their trust in investment advisers,” Sheldon L. Pollock, associate director of the SEC’s New York Regional Office, said in a statement. “Our program remains focused on ensuring that investment advisers make full and complete disclosures in order to increase investor confidence.”
Bruderman's firm said the SEC order "does not mention any investor complaints, that anyone lost a dollar, or that either BAM or Matthew J. Bruderman received any unlawful gains," the company said.
"BAM and Matthew J. Bruderman are free to conduct business in the financial services industry without limitation, just as the Bruderman family has done for the past 100 years," the company said.
But Nassau Minority Leader Kevan Abrahams (D-Freeport) said Bruderman owes lawmakers and county officials a full accounting of what happened.
"I think Mr. Bruderman should disclose to the county exactly the nature of his conduct and what exactly transpired," Abrahams said. “We’re definitely concerned. Whenever there is a violation of the SEC, or any particular provisions or rules or guidelines or laws, we’re always concerned."
Nassau County Executive Bruce Blakeman, a Republican, appointed Bruderman chairman of NuHealth in 2022. Bruderman served on Blakeman's transition team when he took office that year.
NUMC has sustained $100 million deficits in each of the past three years. NuHealth said this month that Bruderman's efforts to correct years of financial mismanagement have resulted in revenue increases.
Asked about the settlement, Blakeman said: “I was pleased to hear that the controversy between the SEC and Chairman Bruderman was resolved to the mutual satisfaction of both parties.”
Scott Eidler covers Nassau County government and politics for Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.
