Full opinion text
MEMORANDUM OPINION KOLLAR-KOTELLY, District Judge. Plaintiff Securities and Exchange Commission (“SEC”) filed this civil enforcement action on July 31, 2002, alleging various violations of the federal securities laws by Defendants Steven Bolla, Washington Investment Network (‘WIN”), Susan Bol-la, and Robert Radano. After the SEC reached a settlement in principle with Defendants Steven and Susan Bolla, a bench trial occurred before this Court on July 26-28, 2004, during which the Court heard testimony relating to the allegations against the remaining Defendants, WIN and Robert Radano. WIN is charged with a primary violation of Sections 203(f), 206(1), and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”), while Mr. Radano is charged with aiding and abetting WIN’s alleged violations. This Memorandum Opinion details the Court’s findings of fact and conclusions of law, as required by Federal Rule of Civil Procedure 52(a). See Fed.R.Civ.P. 52(a) (“In all actions tried upon the facts without a jury ... the court shall find the facts specially and state separately its conclusions of law thereon”). Based upon the credible evidence adduced at trial and all reasonable inferences to be drawn from the testimony of the witnesses and the documentary evidence in the case, the Court concludes that Defendants WIN and Robert Radano violated Sections 203(f), 206(1), and 206(2) of the Advisers Act. As such, pursuant to Federal Rule of Civil Procedure 58, the Court shall enter judgment in favor of the SEC, shall issue injunctions barring Defendants from future violations of these provisions, and shall impose a civil money penalty fine of $15,000 against Mr. Radano and a civil money penalty fine of $50,000 against WIN. I: PRELIMINARY FINDINGS OF FACT . Background 1.Defendant WIN is an investment adviser located in Bethesda, Maryland. PL’s Ex. 40, 42; Burdette Dep. 52:23-53:2; Radano Dep. at 13:16-14:4; Radano Investigative Test. 20:5-7; Trial Tr. at 44:17-18, 55:7-11, 55:21-56:4, 71:25-72:16, 97:21-98:4, 101:14-102:10, 106:12-107:1, 113:25-114:4, 119:12-19, 126:11-17, 131:19-24, 132:22-135:15, 136:5-12, 339:22-24, 379:18-21. Since 1997, WIN has been a registered investment adviser operating as an investment consulting entity. J. Pre-Tr. Stmt., Stipulation # 1. WIN is currently registered as an investment adviser in the State of Connecticut, PL’s Ex. 42, 53, 65-68, Trial Tr. 119:12-19, Radano Investigative Test. 83:22-84:14, 85:20-22, and was formerly registered as an investment adviser in the Commonwealth of Virginia, PL’s Ex. 40, 43, Radano Dep. at 19:3-11, Trial Tr. at 102:2-4. 2. Defendant Robert Radano is also a resident of Bethesda, Maryland, Radano Dep. at 3:9-12; Trial Tr. 262:7-8, and has been an investment adviser registered with the State of Connecticut since 1998, Pl.’s Ex. 42, 53, 65-68, Radano Dep. at 4:25-5:14; Trial Tr. 101:4-7, 119:12-19, 144:23-25, 262:23-24, 268:1-5. Mr. Radano graduated from George Washington University in .1977 with a B.A. in Political Science. From 1977 through 1985, Mr. Radano worked in various political positions, including as a congressional aide. In 1985, he became a Series 7 registered broker with Legg Mason in Washington, D.C. From 1985 through 1997, Mr. Radano worked in various Series 7 broker positions for Legg Mason; Shearson, Lehman and Hutton; and Washington Investment. In March 1997, Mr. Radano obtained his Series 65 and became a registered investment adviser. Radano Dep. at 4:4-20, 4:25-5:14. Steven Bolla and the Origin of the Business Relationship with Lockwood Financial 3. In the late 1990s, Defendant Steven Bolla began working as an investment ad~ viser with Lockwood Financial Services, Inc. (“Lockwood”), a broker-dealer and registered investment adviser that acted as a third-party administrator for a large group of highly regarded money managers. Bolla Dep. at 16:1-17; Burdette Dep. at 6:10-14, 25:21-24; Radano Dep. at 11:10-12:8; Trial Tr. at 276:9-15. Formed in 1996 by former executives from Smith Barney, Lockwood is based in Malvern, Pennsylvania, with branch offices across the country. By the year 2000, when events relevant to this case occurred, Lockwood had over $6 billion in assets under management. Burdette Dep. at 8:3-13, 9:8-15. 4. Lockwood’s business model was to serve as a nexus between investment advisers and institutional money managers by offering an investment vehicle known as a “wrap” account. Trial Tr. at 277:9-19; Bolla Dep. at 16:1-17:2. These “wrap” accounts allowed individual clients of Lockwood’s affiliated investment advisers to pool their assets to meet the rather large minimum investment amounts required by Lockwood’s institutional money managers. Burdette Dep. at 9:20-24; Radano Dep. at 32:7-19; Trial Tr. at 277:9-19, 277:20-278:16. 5. Lockwood had no sales force; rather, it attracted clients for its investment adviser business through arrangements with individual investment advisers who referred their client assets to Lockwood. Bolla Dep. at 11:17-12:8; Trial Tr. at 276:9-277:8, 283:3-15. Clients referred to Lockwood by an individual investment consultant entered into a separate contract with Lockwood, and became clients of Lockwood as well. Bolla Dep. at 18:17-19:17; Burdette Dep. at 10:6-9, 61:18-62:14; Trial Tr. at 47:11-13, 71:8-18, 283:20-284:6; Pl.’s Ex. 19. 6. Under Lockwood’s “Managed Account Link” program, Lockwood handled all account administration and charged the client a single “wrap fee” for the overall management and servicing of the client’s account, out of which Lockwood retained an “advisory fee” for itself and paid fees to the clearing agent (generally, Charles Schwab & Co.), the money managers, and the individual investment advisers, each of whom received fees based generally upon a percentage of the assets that the client had invested. Bolla Dep. at 16:1-17:2, 24:21-25:7, 25:22-26:4; Burdette Dep. at 15:4-17:25; Trial Tr. at 277:2-280:24; PL’s Ex. 22, 23-30; Defs.’ Ex. J, K. 7. Each individual investment adviser who referred clients to Lockwood was given a unique four-letter “rep code” to record the source of the client referral and also to determine to whom the consultant fee payments should be remitted. Bur-dette Dep. at 13:5-11, 14:11-15:16. Mr. Bolla was assigned the rep code “OFAA.” Bolla Dep. at 24:6-11; Burdette Dep. at 12:19-13:4, 27:11-20. Bolla, Robert Radano, and the Creation of WIN 8. Defendant Robert Radano, who knew Mr. Bolla professionally from then-prior broker-dealer work, was attracted to the Lockwood model; however, unlike Mr. Bolla, Mr. Radano did not have any client assets that he was in a position to refer to Lockwood, nor was Mr. Radano at that time licensed as an investment adviser. Trial Tr. at 263:20-264:25; 270:2-271:19, 287:24-288:23. Despite his lack of client assets, Mr. Radano believed that he would eventually build a referral business by soliciting certified public accountants (“CPAs”) in the Washington, D.C., area and agreeing to share the Lockwood referral fees with the CPAs whose clients chose to invest assets through Lockwood. Trial Tr. at 281:282:24. 9. Upon reaching a mutual understanding, Messrs. Bolla and Radano decided to form WIN as a vehicle through which they could work as individual investment advisers with Lockwood, with each person receiving his share of the Lockwood consultant feds attributable to his efforts. Radano Dep. at 32:25-34:5, 37:12-23, 38:7-17, 41:10-42:3, 43:79; Bolla Dep. at 19:14-20:8; Trial Tr. at 274:16-275:10, 283:20-284:9, 285:15-286:9. In addition to the client investments with the Lockwood institutional money managers, WIN clients also invested with Mount Lucas Management (“MLM”), an independent money manager. PL’s Ex. 48, 49; Bolla Dep. at 35:21-36:10, 100:1-5; Radano Dep. at 54:2-55:7; Trial Tr. at 411:9-412:25. MLM was initially a money manager option for clients through Lockwood but when MLM and Lockwood disassociated, some clients of Mr. Bolla and Mr. Radano retained their investments there, and MLM sent payments for the consultant fee component of those accounts directly to WIN. Id. 10. In 1999, WIN registered as an investment adviser in the Commonwealth of Virginia. Pl.’s Ex. 43; Radano Dep. at 19:13-21; Trial Tr. at 101:25-102:4. In June 2000, the State of Connecticut approved WIN’s registration as an investment adviser in that state. PL’s Ex. 42; Trial Tr. at 102:5-10, 119:12-19. WIN received compensation for providing advice to its clients relating to securities investments. PL’s Ex. 22, 23-30; Defs.’ Ex. J, K; Grotto Dep. at 25:24-26:11; Radano Dep. at 43:24-44:2; Trial Tr. at 286:10-17, 301:22-302:3. Lockwood and MLM deducted WIN’s advisory fees from client accounts, and sent those fees via check to WIN. PL’s Ex. 22, 23-30, 47-49; Defs.’ Ex. J, K; Burdette Dep. at 27:22-28:8, 39:4-12; Bolla Dep. at 25:22-26:4, 29:12-25, 36:5-10, 115:19-21; Investigative Test. 146:25-147:2, 148:3-12, 148:22-149:14, 244:21-245:7; Trial Tr. at 218:24-219:2. Client account forms designated WIN as the investment advisory firm, PL’s Ex. 3, 5, 19, 21, 60, 61, and WIN clients such as Nancy DeFelice and Karen Grotto considered WIN to be their investment adviser, Grotto Dep. at 10:6-12; Trial Tr. at 44:17-18, 55:7-11, 55:21-56:4, 71:25-72:16, 97:21-98:4. 11. When Mr. Radano and Mr. Bolla formed WIN, Mr. Radano knew that the SEC was investigating Mr. Bolla’s conduct with respect to another investment advisory firm, Trustcap Financial Group (“Trust-cap”). Radano Dep. at 7:13-8-:18, 9:2-11; Trial Tr. at 272:15-22; J. Pre-Tr. Stmt., Stipulation # 2. Trustcap, and Mr. Bolla’s association with that entity, entirely predated the creation of WIN, and had no relationship to either WIN or Mr. Radano'.' J. Pre-Tr. Stmt., Stipulation # 3. Messrs. Radano and Bolla believed that the SEC’s investigation into Trustcap would lead, in all likelihood, to the SEC barring Mr. Bolla from being associated with any investment adviser. Radano Dep. at 59:7-11; Investigative Test, at 161:8-16, 169:20-170:3. Because Mr. Ra-dano and Mr. Bolla were concerned about potential SEC action against Mr. Bolla relating to the Trustcap matter, they agreed not to name Steven Bolla as an owner of WIN. Bolla Dep. at 9:9-10:1; Radano Dep. at 13:4-11; Investigative Test, at 63:21-64:1, 66:23-67:5, 81:3-8; Trial Tr. at 124:24-125:3, 294:24-295:2. 12. Instead, Mr. Bolla and Mr. Radano agreed to place the ownership of WIN in the names of Mr. Radano and Susan Bolla, Mr. Bolla’s wife. PL’s Ex. 52; Bolla Dep. at 8:20-23, 10:11-16; Radano Dep. at 12:25-13:3; Investigative Test, at 63:20-22; Trial Tr. at 110:10-22, 124:24-125:3, 294:24-295:2, 296:10-12. The ownership of the company was set up in this manner based upon the advice of counsel. Bolla Dep. at 10:11-14; Trial Tr. at 294:12-296:9. At that time, Mrs. Bolla had no experience in the securities industry. Investigative Test, at 68:13-22. Indeed, during the time period relevant to this case, Mrs. Bolla never acted as an investment adviser, nor did she ever discuss any substantive issues with WIN clients. Bolla Dep. at 8:10-15, 11:17-21:11; Susan Bolla Dep. at 10:3-11:11, 13:21-14:6; Radano Dep. at 17:6-16, 163:7-11; Investigative Tr. at 21:12-17, 67:16-24, 214:2-8; Trial Tr. at 66:22-23; Defs.’ Proposed Findings of Fact ¶ 17. At most, Mrs. Bolla would assist WIN on occasion with certain administrative duties, such as answering the phone, filing, or forwarding messages to Mr. Bolla. Bolla Dep. at 11:17-13:1. As such, from the time WIN began conducting business, Messrs. Bolla and Radano were the principals of WIN and effectively ran the firm. Bolla Dep. at 8:3-5; Susan Bolla Dep. at 8:5-15; Investigative Test, at 63:11-18. 13. Ownership in WIN never involved any equity interest. WIN was not created or expected to build an equity interest for its owners; rather, WIN was merely a pass-through for the payment of Lockwood and MLM advisory fees earned by Mr. Bolla and Mr. Radano. Trial Tr. at 291:14-292:20. 14. After forming WIN, Mr. Radano became licensed as an investment adviser and submitted his own “rep code” application to work with Lockwood as an individual investment adviser. PL’s Ex. 17; Rada-no Dep. at 87:6-88:5. In addition, both Mr. Radano and Mr. Bolla established WIN checking accounts. PL’s Ex. 47; Defs.’ Ex. 1; Radano Dep. at 143:1-144:12; Trial Tr. at 303:10-17, 304:11-17, 305:1-7. However, Mr. Bolla was responsible for WIN’s finances: he deposited WIN’s fees from Lockwood and MLM in the WIN checking account that he established, PL’s Ex. 1, 22, 47; Defs.’ Ex. N; Bolla Dep. at 89:10-90:2; Investigative Test, at 246:8-17, and made payments on behalf of WIN to Radano, himself, and third-parties, PL’s Ex. 47, 50; Bolla Dep. at 32:2-4, 32:13-17, 36:5-10, 122:22-123:3; Susan Bolla Dep. at 15:5-11; Radano Dep. at 53:9-16, 103:13-104:8, 131:17-24; Trial Tr. at 304:8-10; J. Pre-Tr. Stmt., Stipulation # 6-7. Mr. Bolla used an account at PNC Bank in the name of “Steve M. Bolla d/b/a Washington Investment Network,” over which he had sole control and sole signatory authority, to handle WIN’s finances and cash flow. J. Pre-Tr. Stmt., Stipulation # 6-7; PL’s Ex. 47; Defs.’ Ex. I. Lockwood sent all client statements and fees, including those pertaining to Mr. Radano’s referrals, directly to Mr. Bolla at his home address. PL’s Ex. 22; Defs.’ Ex. J; Bolla Dep. at 23:11-24:11; Trial Tr. at 298:15-299:2, 301:21-302:6. Mr. Bolla and Mr. Radano worked in different locations and had only sporadic personal contact, as Mr. Bolla maintained an office in his home in suburban Virginia, while Mr. Radano kept a small, shared rental suite office in Bethesda. Trial Tr. at 296:23-297:16. Due to Mr. Bolla’s control over WIN’s finances, Mr. Radano never saw originals or copies of the fee payment checks sent from Lockwood to Mr. Bolla, nor did Mr. Radano see monthly client account statements for the clients that Mr. Bolla had referred to Lockwood. Trial Tr. at 298:9-300:20, 301:21-302:6, 305:13-15. 15.Mr. Bolla and Mr. Radano were held out as the face- of WIN. J. Pre-Tr. Stmt., Stipulation # 6-7; PL’s Ex. 47; Defs.’ Ex. I; Trial Tr. at 48:6-9, 72:15-25 (Ms. DeFelice notes that she considered Mr. Bolla and Mr. Radano “the face of WIN”). Moreover, clients were led to believe that Mr. Bolla — and not Mrs. Bolla— was a principal of the firm. Trial Tr. at 45:1-7. While clients, of WIN felt that they would interact with a particular individual at WIN, they felt that they were investing with the company itself — not a particular individual. Trial Tr. at 48:3-5 (Ms. DéFelice notes that “I expected this, the role of WIN, the entity to be like when you invest with a Merrill Lynch or a Paine Webber, whatever, that was the company”). 16. By the summer of 2000, Mr. Rada-no had a handful of clients that generated roughly $10,000 per year in advisory fees to him — an amount he characterized as “very, very low.” Defs.’ Ex. O; Trial Tr. at 302:10-21. In contrast, Mr. Bolla referred approximately $30-40 million in client assets to Lockwood, garnering him roughly $150,000 per year in advisory fees. Defs.’ Ex. O; Trial Tr. at 302:22-303:7. June 2000 — The SEC Bars Bolla From, Associating With Any Investment Adviser 17. The expectation that the SEC would bar Mr. Bolla from associating with any investment adviser as a result of the Trusteap investigation was ultimately fulfilled in 2000. Pl.’s Ex. 58; Bolla Dep. at 36:24-37:14; Radano Dep. at 58:11-23; Trial Tr. at 318:18-20. In January or February 2000, Mr. Bolla told Mr. Radano that the SEC had decided to bar him. Radano Dep. at 93:12-24; Trial Tr. at 115:15-23, 137:1-10, 138:7-13; Defs.’ Proposed Findings of Fact ¶ 30. On March 20, 2000, as part of a settlement with the SEC in the Trusteap matter, Mr. Bolla signed his consent to the imposition of the bar. PL’s Ex. 56; Bolla Dep. at 37:20-38:7. On June 19, 2000, the Hon. Thomas Flannery of ■ the United States District Court for the District of Columbia issued a judgment enjoining Mr. Bolla from violating the anti-fraud and other provisions of the Investment Advisers Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, and imposed on him a $10,000 penalty. PL’s Ex. 57; Bolla Dep. at 38:13-25. On June 20, 2000, the SEC issued an Order barring Mr. Bolla from associating with any investment adviser, with the right to reapply for association after five (5) years from the date of entry. PL’s Ex. 58; Bolla Dep. at 38:13-25; J. Pre-Tr. Stmt., Ex. 4. There is no evidence that Mr. Radano, after being informed in early 2000 of Mr. Bolla’s upcoming bar, took any action to prepare for the imposition of that bar before June 20, 2000. Radano Dep. at 93:25-94:13; 171:2-9, 172:18-22. In his testimony before the SEC, Mr. Radano claimed that he did not talk further with Mr. Bolla about the upcoming bar because he believed that the entire transition would simply be a matter of one phone call to Lockwood. Investigative Test, at 171:2-17. 18. Shortly before his bar, Mr. and Mrs. Bolla relocated from Centreville, Virginia, to Alpharetta, Georgia, on June 16, 2000. Bolla Dep. at 43:23-25; Trial Tr. at 154:20-33. 19. Mr. Radano learned of the imposition of the bar against Mr. Bolla within a day or so after it was issued, from a representative of Charles Schwab, a clearing agent and custodian for Lockwood accounts, who called WIN to say that Mr. Bolla would be unable to act as an investment adviser vis-á-vis Lockwood customers whose accounts were held in custody by Schwab. Radano Dep. at 58:24-59:6; Investigative Test. 34:3-7, 52:25-53:3, 156:9-20, 157:20-23; Trial Tr. at 318:18-319:3. Mrs. Bolla also learned that the SEC had barred Mr. Bolla from associating with WIN, as an investment adviser, shortly after the imposition of the bar. Susan Bolla Dep. at 18:12-20. 20.Mr. Radano testified that he immediately called Mr. Bolla and stated that for any Lockwood clients still a part of WIN, all records needed to be sent to Mr. Radano. Bolla Dep. at 35:10-20, 47:5-25; Trial Tr. at 321:21-323:2. Moreover, during the period immediately following Mr. Bolla’s bar, i.e., roughly July 2000, Mr.' Radano testified that he and the Bollas agreed that Susan Bolla’s nominal ownership was terminated. Susan Bolla Dep. at 44:4-12 (noting that “I thought it was all dissolved”); Trial Tr. at 312:5-317:6. Mr. Radano produced a memorandum dated July 10, 2000, that purported to memorialize his and Mrs. Bolla’s agreement regarding the abrogation of her ownership interest in the firm. Pl.’s Ex. 52. However, Mr. Radano’s claim that Mrs. Bolla’s nominal ownership was terminated during this period is contradicted in four ways. First, the only evidence provided by Mr. Radano supporting the transmission of the alleged July 10, 2000 agreement was a June 12, 2001 facsimile header reflecting that Mr. Radano had sent the memorandum to the Bolla’s new home in Georgia. PL’s Ex. 52; Susan Bolla Dep. at 15:22-16:2 (Mrs. Bolla testified that she had never seen the memorandum prior to her deposition), 19:14-24 (Mrs. Bolla noted that she had never discussed the contents of the memorandum with Mr. Radano); Trial Tr. at 315:18-25. Second, despite knowledge of Mr. Bolla’s impending bar, Mr. Radano registered Mrs. Bolla as a WIN investment adviser in the State of Connecticut in March 2000. PL’s Ex. 53; Trial Tr. at 121:22-24. In December 2000, Mr. Rada-no renewed Mrs. Bolla’s registration in Connecticut as a WIN investment adviser for the 2001 calendar year. PL’s Ex. 53, 66; Trial Tr. at 241:9-19. Third, in February 2001, Mr. Radano wrote a check payable to Mrs. Bolla for $2,770 from client fees generated in the first quarter of 2001. PL’s Ex. 50; Radano Dep. at 162:15-20; Bolla Dep. at 65:6-66:7, 66:24-67:11, 118:17-25; Investigative Test, at 117:20-24, 139:17-25; Trial Tr. at 439:12-440:10. Fourth, in April 2001, Mr. Rada-no admittedly told staff from the SEC’s Office of Compliance Inspections and Examinations that Mrs. Bolla was a current owner of WIN. Stipulation, J. Ex. 1. Given these glaring contradictions vis-á-vis Mr. Radano’s claim, the Court concludes it is more likely than not that the purported July 10, 2000 agreement was drafted after the fact, and that Mr. Radano did not formally move to 'abrogate Mrs. Bolla’s ownership interest in WIN until the date of the June 12, 2001 facsimile. 21. Mr. Radano testified that he hoped to take over Mr. Bolla’s accounts, although he was skeptical that the accounts would stay with him after their transitioning because he did not know most of the clients or CPAs with whom Mr. Bolla did business and had never shared in any of Mr. Bolla’s substantial fees from that business; as such, he expected that Mr. Bolla would sell or transfer this very valuable book of business to another party. Trial Tr. at 308:5-312:4. Moreover, Mr. Radano testified that he was “petrified” that he would lose the ability to access Lockwood as a result of Mr. Bolla’s bar and Lockwood’s reaction to it. Trial Tr. at 209:10-14, 361:6-9. The Events Subsequent to Mr. Bolla’s Bar: Notifying Outside Parties or Business as Usual? — Mr. Radano’s Contacts With Lockwood 22. Upon learning of Mr. Bolla’s bar, Mr. Radano called Lockwood and — after a series of transfers — spoke with James Burdette, Lockwood’s broker-dealer president and its director of compliance. Bur-dette Dep. at 5:19-24; Trial Tr. at 323:3-324:3, 336:4-9. During this phone conversation, Mr. Radano informed Mr. Burdette of the SEC’s bar of Mr. Bolla. Burdette Dep. at 28:9-19. The exact timing of this phone conversation is somewhat in dispute: Mr. Burdette initially told SEC staff that Mr. Radano had called him “around June 30, 2000” to inform him of Mr. Bolla’s bar, J. Pre-Tr. Stmt., Stipulation # 7; Bur-dette Dep. at 83:8-84:20; Burdette SEC Test, at 154:18-24; however, Mr. Burdette later disavowed his first statement to the Commission, and — during his sworn testimony before the SEC during the investigation into Mr. Bolla’s activities following his bar — asserted that he had not been called by Mr. Radano until late July or August 2000, Burdette SEC Test, at 154:18-24; during his deposition in this case following his sworn testimony before the SEC, Mr. Burdette testified that Mr. Radano did not call him until the latter part of August 2000, Burdette Dep. at 28:9-19. Regardless of the exact timing of this phone call, which occurred by the end of August 2000 at the latest, Mr. Burdette testified that but for Mr. Radano informing Lockwood of Mr. Bolla’s bar, Lockwood would not have ever known about Mr. Bolla’s bar given the existing state of its compliance systems. Burdette Dep. at 21:6-13. 23.During this phone call, Mr. Radano requested that all client account statements, communications, and fee payments for all WIN-referred client accounts at Lockwood be thereafter re-routed to him rather than Mr. Bolla. Burdette Dep. at 29:16-30:8. Despite Mr. Radano’s request, Lockwood refused to recognize Mr. Rada-no’s authority to act vis-á-vis WIN client accounts — even those accounts referred by Mr. Radano himself — as Lockwood viewed the “WIN” client accounts as Mr. Bolla’s accounts and saw Mr. Radano merely as “an administrative support person” to Mr. Bolla. Pl.’s Ex. 44; Burdette Dep. at 27:11-20. Mr. Burdette informed Mr. Ra-dano that Lockwood would not re-route the client statements and fee payments without a written letter of authorization (“LOA”) switching each client’s individual investment adviser from Mr. Bolla to Mr. Radano. PL’s Ex. 44; Burdette Dep. at 29:25-30:15. 24. Lockwood also took the further step of affirmatively discontinuing Mr. Ra-dano’s pass-code access to Lockwood’s internet-based account system. As such, Mr. Radano’s access to information regarding the Lockwood client accounts referred by WIN — b.oth by Mr. Bolla and himself — was terminated. Trial Tr. at 349:1-10. Having been told by Mr. Bur-dette that he had no “rep code” at Lockwood because his .1999 application had not been fully approved at that time, Mr. Ra-dano resubmitted his earlier application that he believed had been approved. Bur-dette Dep. at 32:12-33:7; Trial Tr. at 350:13-351:10, 352:4-353:1. 25. According to his testimony, subsequent to this conversation with Mr. Bur-dette, Mr. Radano immediately contacted the individuals he considered to be his clients in the WIN business and informed them of Mr. Bolla’s disciplinary bar and transition out of WIN. Trial Tr. at 356:17-357:2. Mr. Radano had obtained the contact information for his clients around June 2000, when he visited the Mr. Bolla’s home and collected a series of boxes with the WIN-referred account information of his clients. Trial Tr. at 3-15. Mr. Radano testified that during this visit, he did not obtain contact information for Mr. Bolla’s WIN clients, necessitating his reliance on Lockwood to provide him the relevant contact information. Id. 26. Also subsequent to his conversation with Mr. Burdette, Mr. Radano sought to obtain LOA’s from WIN’s clients so that he could gain access to their information and fee payments. Trial Tr. at 383:4-8. On October 4, 2000, Mr. Burdette drafted a letter to Mr. Radano in order to clarify the necessary documents that Mr. Radano would need in order for Lockwood to treat him as the “adviser” on the client accounts. Pl.’s Ex. 44. Mr. Burdette wrote: A Letter of Authorization is required from each client naming you as the new advisor on the account. ****** LOAs to change the Advisor must be received by October 31, 2000 by Lockwood in order for you to be paid for the 4th quarter. You will not be paid for any account that an LOA has not been received and the consultant fee will be credited back to client accounts. In addition, for any accounts that an LOA has not been received by October 81, 2000, Lockwood will contact the clients directly. It is Lockwood’s responsibility as a fiduciary and B/D of record to inform any client who has not yet signed a change of advisor LOA that their account is currently being held in a Lockwood house rep number due to Steve Bolla’s no longer being Investment Advisory licensed. They will be instructed that Lockwood does not take accounts directly and that they must choose a new advisor. Id. (emphasis added). 27.Mr. Radano asserts that “[u]ntil Lockwood made these client transfers in its system, [he] had no access to client contact information for most of the former Bolla clients of Lockwood and no authorization from Lockwood to contact those clients or to receive Lockwood client statements or fee payments related to those client accounts.” Defs.’ Proposed Findings of Fact ¶ 48; Trial Tr. at 168:18-169:3 (claiming that Lockwood affirmatively prohibited him from contacting WIN clients). A plain reading of the October 4, 2000 letter from Mr. Burdette is contradictory on this matter, as it indicates that if Mr. Radano failed to obtain LOAs from WIN’s clients by October 31, 2000 — over four months after Mr. Radano had first learned of Mr. Bolla’s bar — at that point, Lockwood would contact those clients. As such, the October 4, 2000 letter indicates an understanding by Lockwood that (1) Mr. Radano would be contacting WIN’s clients, and that it would only act as the fail-safe contact for those clients in the event that he failed to do so by October 31, 2000; and (2) Mr. Radano would be able to contact WIN’s clients and obtain letters of authorization from all of its clients without Lockwood providing him affirmative access to their records containing the contact information. See Pl.’s Ex. 44. Lockwood never contacted any of the clients at issue to inform them of Mr. Bolla’s disciplinary status or to ask the client to choose a new adviser. Burdette Dep. at 66:7-16. There is nothing in the letter to support Defendant’s view that he could not contact WIN clients at any time. 28. LOAs for Mr. Radano’s WIN clients were executed and forwarded to Lockwood at the end of October 2000. PL’s Ex. 45, 46; Trial Tr. at 463:20-464:15. Lockwood eventually switched many clients that had been referred by Mr. Bolla over to Mr. Radano as the investment adviser of record in the Lockwood system, apparently -even without signed LOAs. Defs.’ Ex. J; Trial Tr. at 398:10-399:6. Lockwood reinitiated Mr. Radano’s pass-code access to its website on November 13, 2000. Defs.’Ex. F. — Mr. Bolla Post-Bar’s Actions, and His Dealings With Mr. Radano 29. For- nine months following the SEC’s imposition of the “bar order,” from June 2000 to March 2001, Mr. Bolla continued to' manage WIN’s finances by depositing fee checks in the WIN checking account at PNC Bank and by making — or directing Mr. Radano to make — payments to third-parties on behalf of the firm. Pl.’s Ex. 47; Bolla Dep. at 33:2-35:2, 54:22-55:17, 56:18-58:11, 59:6-18, 61:1-10, 62:7-17, 63:1-22, 64:23-65:5, 97:24-98:14, 98:24-99:4, 99:10-10, 101:5-102:10, 102:16-103:17, 104:1-16, 105:16, 106:4, 106:16-107:1, 110:5-12, 111:16-113:6; Investigative Test. 254:11-255:9, 256:1-12, 256:24-257:2, 257:24-258:11, 262:22-264:10, 274:17-275:2; Radano Dep. at 130:2-24, 131:8-18, 133:5-134:10,158:23-159:14. 30. Mr. Bolla continued to provide investment advice to at least two WIN clients after his bar, acting as WIN investment adviser to Nancy DeFelice for ten (10) months and to David Meredith— WIN’s largest account — for four (4) months. PL’s Ex. 60-62; Grotto Dep. at 13:14-14:8, 17:24-18:3, 18:24-19:12, 19:18-20:16, 23:8-24:17, 32:25-33:18, 65:8-17; Trial Tr. at 53:24-54:5, 55:10-13, 57:11-16, 57:17-58:8, 59:2-20, 64:23-65:16, 70:2-10, 75:3-8, 76:1-3. Mr. Radano was aware that Mr. Bolla continued to have a role in the DeFelice and Meredith accounts at WIN after the imposition of his bar. Grotto Dep. at 23:8-24:17; Radano Dep. at 202:22-203:21; Trial Tr. at 82:21-25, 88:7-14, 97:6-12, 164:5-8, 175:13-16, 180:14-17, 398:2-4. 31. Following the SEC’s imposition of the bar order, Mr. Bolla also continued to act as the WIN point of contact for other firm clients. He received calls and requests from numerous WIN clients, and instructed Mr. Radano to act on those requests. Bolla Dep. at 167:19-25; Rada-no Dep. at 116:9-117:9 (noting that Mr. Bolla directed that he make roughly a dozen phone calls); Investigative Test, at 58:19-21 (“He began by referring phone calls to me from what were formerly his clients.”), 61:23-62:5, 103:18-104:4, 104:17-105:9,108:16-109:13 (noting that a quarterly fee check of $20,000 was sent to Mr. Bolla in October, 2000, who then sent Mr. Radano a check of $2,800 despite Mr. Ra-dano’s request for the whole amount); Trial Tr. at 156:24-158:12 (Mr. Radano followed Mr. Bolla’s instructions regarding a payment that Mr. Bolla directed him to make on behalf of WIN in November 2000), 261:2-7, 358:20-25 (Mr. Bolla directed Mr. Radano to make certain follow-up calls to WIN clients regarding their WIN accounts), 447:12-448:7. 32. Despite his bar, Mr. Bolla retained control over his account at PNC Bank in the name of “Steve M. Bolla d/b/a Washington Investment Network”; as such, he continued to retain and deposit WIN payment checks received from Lockwood throughout the Fall of 2000. Radano Dep. at 60:14-23, 63:21-64:16, 98:22-99:5, 101:17-102:8; Trial Tr. at 363:5-11. Mr. Radano never contacted PNC Bank as part of an attempt to sever Mr. Bolla’s control over WIN’s finances. Trial Tr. at 153:7-154:12. Mr. Radano testified that he did not contact PNC Bank because “this PNC account was Steve Bolla’s d/b/a account in his social security number that he opened. He had sole control over it. I was powerless to call PNC and tell them to shut this account down. They would not have talked to me.” Trial Tr. at 153:21-25; see also Investigative Test, at 60:19-23, 61:23-62:5 (Radano testified that in June 2000, he asked Steven and Susan Bolla to send him the checkbook for this account, and they replied that they would but did not follow through). 33. In July, August, October, and November of 2000, Lockwood sent Mr. Bolla no fewer than six fee payment checks to-talling more than $79,000, as well as client account statements. Defs.’ Ex. J, M; J. Pre-Tr. Stmt., Stipulation # 5; Burdette Dep. at 86:9-19; Bolla Dep. at 32:21-35:2, 56:18-57:7, 57:12-58:11, 59:6-18, 61:1-10, 62:7-12. The checks and client statements sent by Lockwood to Mr. Bolla after the bar reflect not only that Lockwood continued to send WIN payments to Mr. Bolla for several months after it had been notified of his bar; indeed, Lockwood even affirmatively changed Mr. Bolla’s address in its system from his Centreville, Virginia, address to his new Alpharetta, Georgia, address, with the change of address first appearing on the July 2000 statement with accompanying fee payment check. Pl.’s Ex. 24, 25. Mr. Radano protested by repeatedly objecting to Lockwood’s actions in continuing to send consultant fee payment checks and account information to Mr. Bolla in light of his SEC bar. Bur-dette Dep. at 28:20-29:15 (Mr. Burdette recalls that Mr. Radano stated, “Why are you sending the checks to Steve? Steve’s barred. He can’t even do business.”). 34. On February 15, 2001, Mr. Radano received a check from Lockwood. Trial Tr. at 439:7-10. This was the first payment that Mr. Radano had directly received from Lockwood. Investigative Test, at 139:17-22. Out of the proceeds from that check, Mr. Radano made a payment to Mrs. Susan Bolla of approximately $2,700. PL’s Ex. 50; Trial Tr. at 439:12-16. According to Mr. Radano, he made the payment after a phone conversation with Mr. Bolla, wherein Mr. Bolla indicated that he “felt that Sue should be paid something” from the check. Trial Tr. at 439:17-20, 439:21-440:5 (Mr. Radano notes that he “didn’t have an objection” to paying the money to Mrs. Bolla, although he “didn’t think she had done a lot” but ultimately agreed with Mr. Bolla to link the amount back “to this fee referral subac-counting work that’s done with the quarterly check”); Radano Dep. at 166:4-9 (Mr. Radano admits the he didn’t “know specifically” what Mrs. Bolla was doing during this period; “[s]he did her general administrative chores as she had during this time frame”); Bolla Dep. at 67:11-69:6, 123:15-25; Investigative Test, at 117:20-24, 119:1-120:10 (Mr. Radano states that the payment reflected “a smaller percentage” of “the quarterly fees that were generated from the accounts that Steven Bolla brought in before he was barred,” i.e., a “token amount for work done at that time”). Mr. Bolla testified that the check was to cover — in part — the moving expenses and some administrative fees incurred by the Bollas during their move to Georgia. Bolla Dep. at 65:6-69:6. Mrs. Bolla had provided no investment advice to any WIN clients, Radano Dep. at 172:15-24, 176:7-20, and Mrs. Bolla had never previously been compensated by WIN, Investigative Test, at 284:21-286:25, 288:13-124, Trial Tr. at 158:19-159:9. Mrs. Bolla further testified that she had no responsibility for filing and keeping track of WIN paperwork, Susan Bolla Dep. at 10:19-22, writing checks, Susan Bolla Dep. at 10:25-11:3, handling any of WIN’s finances, Susan Bolla Dep. at 13:21-23, or working on the “subaccounting” or other internal accounting, Susan Bolla Dep. at 13:24-14:3, 15:5-11. Mrs. Bolla also noted the she had never seen the monthly reports from Lockwood, Susan Bolla Dep. at 27:6-11, or any checks coming to WIN, Susan Bolla Dep. at 30:6-12; see also id. at 39:11-16 (Mrs. Bolla never received this payment, and did not believe that she was paid anything in 2001). — Mr. Radano’s Conversations With Certain WIN Clients 35. Neither Mr. Bolla nor Mrs. Bolla ever disclosed Mr. Bolla’s disciplinary history to any WIN clients. Bolla Dep. at 45:5-8, 47:13-15, 54:6-17; Susan Bolla Dep. at 26:1-4; Trial Tr. at 66:9-11. Mr. Bolla never sent his WIN clients a letter saying that he was leaving WIN; he simply stopped communicating with them. Investigative Test, at 167:19-24; Bolla Dep. at 54:6-17 (recalling, at most, one phone call with a client — Tim Reardon— telling him to get in touch with Mr. Rada-no). 36. As noted previously, during the period following Mr. Bolla’s bar, in roughly the Fall of 2000, Mr. Bolla referred some of his WIN clients to Mr. Radano; these clients typically contacted Mr. Radano telephonically after the referral. Radano Dep. at 116:9-117:9 (noting that Mr. Bolla directed that he make roughly a dozen phone calls); Investigative Test, at 58:19-21 (“He began by referring phone calls to me from what were formerly his clients.”); Trial Tr. at 163:20-22. Mr. Radano told some, but not all, of these referred clients, Trial Tr. at 163:23-164:8, that Mr. Bolla was “out of the business” and no longer with WIN due to the fact that “[h]e had gotten into trouble at the SEC in an unrelated matter to WIN and to client accounts,” Trial Tr. at 165:3-9, 166:2-19. Mr. Radano also informed these referred clients that he “was working on getting control of all of [Mr. Bolla’s] accounts.” Trial Tr. at 165:8-9. In these conversations, Mr. Radano did not use the term “bar,” and did not specifically tell the referred clients that Mr. Bolla “was prohibited from being an investment adviser.” Trial Tr. at 164:9-167:6. Primarily, if a client called in, Mr. Radano “would have a discussion with them about their account relationship.” Trial Tr. at 164:2-3. 37. Although Mr. Radano knew that Mr. Bolla was continuing to advise WIN client David Meredith, Grotto Dep. at 23:8-24:17, he did not disclose any aspect of Mr. Bolla’s disciplinary history to Karen Grotto, the daughter of Mr. Meredith and the day-to-day administrator for the Meredith accounts. Grotto Dep. at 25:3-9, 31:24-32:12; Radano Dep. at 73:10-24. During October 2000, after experiencing trouble contacting Mr. Bolla, Ms. Grotto contacted Mr. Radano to inquire as to Mr. Bolla’s availability; Mr. Radano told Ms. Grotto that Mr. Bolla was “out of the office.” Grotto Dep. at 32:5-12. Later in the conversation, Mr. Radano simply informed Ms. Grotto that “ ‘he’s [Mr. Bolla] moved on,” ’ but did not tell her where Mr. Bolla had moved. Id. at 44:4-11. At no point during the course of Ms. Grotto’s conversations with Mr. Radano did he ever mention that Mr. Bolla had been barred by the SEC from acting as an investment adviser. Id. at 31:24-32:12. This was the first discussion that Mr. Radano had with Ms. Grotto and, at that time, Ms. Grotto was not Mr. Radano’s client. Trial Tr. at 384:21-23, 386:25-388:4. 38.During Ms. Grotto’s call, she inquired about a concentrated block of stock that her family had in Packard Bioscience, which had nothing to do with the Lockwood accounts or WIN. Trial Tr. at 388:5-389:1. After the conversation with Ms. Grotto, Mr. Radano called Packard Bioscience and obtained information about the company. After learning that Merrill Lynch was providing guidance to Packard Bioscience, he called Merrill Lynch, found a contact there who specifically knew the venture capitalists and research analysts covering the stock, and discussed Ms. Grotto’s situation with the contact. Subsequently, Mr. Radano called Ms. Grotto to give her contact information of the individual at Merrill Lynch, told her to immediately contact that individual, and notified her that there was no longer a need for his involvement in this process. Trial Tr. at 389:25-392:12. While Mr. Radano was not referring all of the Meredith accounts to Merrill Lynch, ultimately Ms. Grotto transferred all of the family’s accounts — ■ including the business that they had with Lockwood — to Merrill Lynch. Mr. Rada-no never made “one dime” off of the account of Ms. Grotto’s family. Trial Tr. at 392:13-394:4. At trial, Mr. Radano testified that he did not inform Ms. Grotto of Mr. Bolla’s bar at this time because (1) Ms. Grotto was not his client, Trial Tr. at 387:21-388:4, and (2) he had received instructions from Mr. Burdette in June 2000 not to contact any of Mr. Bolla’s clients, Trial Tr. at 389:2-14. See Defs.’ Proposed Findings of Fact ¶ 55. This is not corroborated by Mr. Burdette.. Therefore, the Court does not credit Mr. Radano, particularly in light of the October 4, 2000 letter from Mr. Burdette. 39. Mr Radano had a similar conversation in April or May 2001 with another WIN investor that had initially been a client of Mr. Bolla, Ms. Nancy DeFelice; as with Ms. Grotto, Mr. Radano was aware that Mr. Bolla continued to advise Ms. DeFelice after his bar. Radano Dep. at 202:22-203:21; Trial Tr. at 82:21-25, 88:7-14, 97:6-12, 164:5-8, 175:13-16, 180:14-17, 398:2-4. 40. Mr. Radano claims to have first attempted to contact Ms. DeFelice prior to this time period, in mid-February 2001. See Defs.’ Proposed Finding of Fact ¶ 56. According to Mr. Radano, he received a fee detail report listing Ms. DeFelice, whose name he was surprised to see because he did not think that any LOA had been submitted to change the account from Mr. Bolla to Mr. Radano. Prior to this transfer, Mr. Radano had never spoken with Ms. DeFelice. According to Mr. Ra-dano, after discovering the transfer, he attempted to contact her, could not reach her, and left several voice mail messages requesting that she call him. Trial Tr. at 420:14^422:7. Ms. DeFelice’s testimony contradicts Mr. Radano’s recollection in several ways. First, she testified that the switch from Mr. Bolla to Mr. Radano as her investment adviser actually occurred in her November 2000 statement, which had a phone number and an address listed for Mr. Radano in the place of Mr. Bolla. Pl.’s Ex. 61, Trial Tr. at 74:2-23. Ms. DeFelice did not want to “be handed off’ to Mr. Radano, with whom she had never had a conversation. Trial Tr. at 75:20-25. Ms. DeFelice then contacted Mr. Bolla, who was difficult to track down; Mr. Bolla then told her that “he would still be working with [her] and that he was still [her] investment consultant.” Trial Tr. at 75:6-8. Second, Ms. DeFelice did not recall getting one or more voice mail messages from Mr. Radano during the late 2000 to early 2001 time period. Trial Tr. at 75:14-19. 41.Ms. DeFelice did not discover that Mr. Bolla had been barred from acting as an investment adviser until the Spring of 2001, when she was contacted telephonieally by the SEC. Trial Tr. at 61:12-62:2. After the phone call with the SEC, Ms. DeFelice spoke with her attorney and then contacted Mr. Radano. Trial Tr. at 62:10-21, 420:14-422:7. Ms. DeFelice testified that, during this conversation, she did not inform Mr. Radano that she was aware of Mr. Bolla’s bar. Trial Tr. at 63:3-6. After Ms. DeFelice asked about Mr. Bolla, Mr. Radano informed her that “Steve was going to pursue more of the insurance angle of the business.” Trial Tr. at 63:3-6, 63:7-10 (for Ms. DeFelice, this meant “Steve’s still doing his investments, because [she] had done a whole investment strategy with Steve around life insurance and Steve had told [her] that it was one of his investment strategies”). After Ms. De-Felice asked him, “Are you aware that Mr. Bolla is being investigated by the SEC?,” Mr. Radano informed her that “a company in California had gone bankrupt and Steve had information around that company and that was what the SEC was investigating, and that WIN was not under investigation and, you know, offered to help me and told me I didn’t need a lawyer. And that was basically it.” Trial Tr. at 63:11-17, 63:18-21 (noting that Mr. Radano never disclosed any aspects of Mr. Bolla’s disciplinary history to her during that call or at any other time), 64:15-19 (detailing that Mr. Radano gave her the impression “Yeah, it’s not a big deal. We’re not under investigation. It’s to do with this company in California and its bankruptcy.”). After this conversation," Ms. DeFelice still believed that Mr. Bolla was working with WIN. Trial Tr. at 83:23-84:5, 86:13-23, 88:10-14 (noting that she was “pressing for this information” because “[t]his was not given voluntarily to me”). Due to concerns about the trustworthiness of Mr. Bolla and WIN, Ms. DeFelice then made the decision to transfer all of her money away from WIN. Trial Tr. at 64:5-14. 42. Mr. Radano’s recollection of the Spring 2001 conversation with Ms. DeFel-ice differs in some respects. Mr. Radano emphasizes that — at the point of the phone call' — Ms. DeFelice already knew of Mr. Bolla’s bar. Trial Tr. at 61:12-63:17, 72:20-23. According to Mr. Radano, Ms. DeFelice was “edgy,” and asked him “a series of questions in rather rapid order” regarding her account and where Mr. Bol-la was at that time. Trial Tr. at 430:8-22. Mr. Radano claims that he “informed Ms. DeFelice that Mr. Bolla had left WIN and that he was with another firm.” Defs.’ Proposed Findings of Fact ¶ 56; Trial Tr. at 435:11-14. Mr. Radano testified that he then tried to “assure her that her account was being handled properly.” Trial Tr. at 431:4-10. Mr. Radano then claimed that Ms. DeFelice- actually “jumped in and told me.... Well, [Mr. Bolla has] been barred.” Trial Tr. at 435:11-14. According to Mr. Radano, he then acknowledged that Mr. Bolla had been barred, and then “went into my ‘Steve had a problem with another firm. It’s unrelated to your situation here. And he’s no longer with WIN. He’s working with a firm in California.’ I went "into the basic lines.” Trial Tr. at 435:15-19. Mr. Radano further notes that Ms. DeFelice testified that she never received any notification of Mr. Bolla’s SEC bar from Lockwood. Trial Tr. at 77:20-78:4. 43. To the extent that their testimony conflicts with that provided by Mr. Rada-no, the Court — having witnessed the demeanor of the witnesses and having weighed their various motivations — credits the testimony of Ms. Grotto and Ms. De-Felice. The Court finds that these two witnesses were clearly more credible than Mr. Radano whenever a conflict in their testimony arose. The Court notes that these clients simply had more of a grievance with Mr. Bolla, who was their long-term contact at WIN, than with Mr. Rada-no. The record does not reflect a claim of bias on their part. II: CONCLUSIONS OF LAW By engaging in the conduct described above, the SEC asserts that Defendant WIN violated Sections 203(f), 206(1), and 206(2) of the Investment Advisers Act, see 15 U.S.C. § § 80b-3(f), 80b-6(1) and (2), and Defendant Robert Radano aided and abetted those violations by WIN. Section 209(d) of the Advisers Act gives the Commission the statutory authority to charge aiding and abetting violations in injunction actions such as the present one brought in United States District Courts. To establish Defendant Radano’s liability under an “aiding and abetting theory,” the SEC must establish: (1) a primary or independent securities violation committed by another party; (2) awareness or knowledge by the alleged aider and abettor that his role was part of an overall activity that was improper; and (3) the alleged aider and abetter knowingly and substantially assisted the conduct that constitutes the primary violation. Investors Research Corp. v. Sec. & Exch. Comm’n, 628 F.2d 168, 178 (D.C.Cir.1980), cert. denied, 449 U.S. 919, 101 S.Ct. 317, 66 L.Ed.2d 146 (1980) (citing Woodward v. Metro Bank of Dallas, 522 F.2d 84, 94-97 (5th Cir.1975)). The SEC has the burden of proving each element of the aiding and abetting claims by a preponderance of the evidence. See Decker v. Sec. & Exch. Comm’n, 631 F.2d 1380, 1388 (10th Cir.1980). In order to determine the potential culpability of WIN and Mr. Radano, the Court first shall examine whether WIN and Mr. Radano fall within the definition of “investment adviser” under Section 202(a)(ll) of the Advisers Act. Because the Court concludes that WIN and Mr. Rada-no fall within the statutory definition of “investment adviser,” the Court shall then analyze whether Defendants violated (1) Section 203(f), and (2) Section 206(1) and 206(2) of the Advisers Act. Finally, given the Court’s finding of liability for the Defendants on these claims, the Court shall then weigh the need for the injunctive relief and/or civil fines as requested by the SEC. A. The Parameters of the Definition of “Investment Adviser” Defendants WIN and Robert Radano seek to escape liability as an initial matter by claiming that they fall outside of the statutory definition of “investment adviser,” as defined in Section 202(a)(ll) of the Advisers Act. According to Defendants, WIN and Mr. Radano were mere “consultants” to Lockwood, and therefore were not required to comply with the parameters of the Advisers Act. See Defs.’ Proposed Findings of Fact ¶¶ 5, 13-14, 24-25, 45. Indeed, Defendants strenuously avoid the use of the word “adviser” throughout their entire Proposed Findings of Fact, preferring instead to label. Mr. Bolla and Mr. Radano as “individual investment consultants. ” See, e.g., id. ¶ 5 (emphasis added). In support of this proposition, Defendants stress that “Lockwood, not WIN, had the custodial and contractual- relationship with the clients at issue”; “Lockwood was the investment adviser and broker-dealer of record”; “Lockwood was the acknowledged fiduciary on the accounts”; and “WIN never acted as anything other than an investment consulting entity (and indeed, Lockwood did not even recognize WIN, but rather treated Bolla individually as the consultant).” Defs.’ Response to Pl.’s Proposed Findings of Fact at 2 (citing Defs.’ Proposed Findings of Fact ¶¶ 5,13-14, 24-25, 45). Section 202(a)(ll) of the Advisers Act provides, in relevant part: An “investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or indirectly through publications or writings, as to the value of securities or as to the, advisability of investing in, purchasing, or selling securities. 15 U.S.C. § 80b — 2(a)(11). The Supreme Court has concluded that “Congress intended the Investment Advisers Act of 1940 to be construed like other securities legislation enacted for the purpose of avoiding frauds, not technically and restrictively, but flexibly to effectuate its remedial . purposes.” Sec. & Exch. Comm’n v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963) (internal quotation marks omitted). As such, it has long been held that “persons who manage [ ] the funds of others for compensation are ‘investment advisers’ within the meaning of the statute.” Abrahamson v. Fleschner, 568 F.2d 862, 870 (2d Cir.1977). Upon a review, it is clear that the record is replete with indicia that WIN and Mr. Radano fall within the statutory definition of “investment adviser” and were-bound in their dealings by the parameters ■ of the Advisers Act. Before creating WIN along with Mr. Bolla, Mr. Radano obtained his Series 65 in March 1997 and became a registered investment adviser. As such, it can be inferred that he considered it a requirement that he be a registered. “investment adviser” before conducting business under the WIN umbrella and engaging in a relationship with Lockwood. Moreover, in 1999, WIN registered as an investment adviser in the Commonwealth of Virginia, and was approved as an investment adviser by the State of Connecticut in June 2000. Client account forms designated WIN as the investment advisory firm, and WIN clients such as Nancy De-Felice and Karen Grotto considered WIN to be their “investment adviser.” See, e.g., Trial Tr. at 44:12-18 (Ms. DeFelice de-scribés WIN as “an investment firm that manages clients’ money”). Indeed, Mrs. Bolla — one of WIN’s principals — testified that the nature of WIN’s business was to “provided financial advice.” Susan Bolla Dep. at 8:12-14. Moreover, WIN received compensation for providing advice to its clients relating to securities investments: Lockwood and MLM deducted WIN’s advisory fees from client accounts, and sent those fees via check to WIN. In his deposition, Mr. Radano explicitly described the service provided by WIN as calling for “investment planning, know your client issues, suitability issues, and then this allocation model, and finally manager selection. But manager selection had to be with approved Lockwood managers. So, in essence, our interaction would be to refer the client to Lockwood, and to refer the client into managed account link program.” Radano Dep. at 33:6-15. Once the WIN client was set up with Lockwood, Mr. Radano and Mr. Bolla’s role would shift: then, their primary duty was to monitor the account relationship, to look over the shoulder of the managers on an individual account basis, to make sure that the large cap value manager was indeed purchasing large cap value stocks, and that the account was consistent with what we thought were the plan and the parameters outlined by the client. Id. at 37:16-23. If the account was no longer consistent with the client’s goals, Mr. Bolla and Mr. Radano were to ensure that “[c]hanges would be made in terms of management, in terms of allocation between stock and bond.” Id. at 42:1-3. While there are certainly distinctions between the business model set up by Mr. Bolla and Mr. Radano and that of investment advisers who have discretionary authority to trade in their clients’ accounts, Mr. Bolla and Mr. Radano were acting as investment advisers through WIN all the same. Importantly, their actions fell under the “persons who manage the funds of others” category set forth in Abrahamson. With WIN, Mr. Bolla and Radano would obtain clients, acquire an awareness of their needs, and then select another manager of those funds; by selecting Lockwood and its system in every case, they were — in effect — channeling their clients’ investment decisions for them. Moreover, when an account was irregular, underper-forming, or inconsistent with the stated goals, Messrs. Bolla and Radano would become involved and assist in making changes to the stock:bond allocation. While not trading in their clients’ accounts, Mr. Bolla and Mr. Radano were both (1) offering advice on how to best maximize return, i.e., by using them to move their money to the managers identified by Lockwood, and (2) actively managing their clients’ accounts during signs of trouble. In return for this service, they were provided oft-substantial compensation in the form of fees generated through the referral process. As such, Mr. Radano and WIN certainly fall within the statutory definition of an “investment adviser” under Section 202(a)(ll) of the Advisers Act. Defendants claim that Lockwood was the allegedly all-important “investment adviser of record” and “named fiduciary,” Defs.’ Proposed Findings of Fact ¶ 24, evinces a fundamental misunderstanding of the terms as applied. Put simply, in this case each WIN client had three or four investment advisers: Mr. Radano and/or Mr. Bolla (depending on who received advisory fees for that client), WIN, and Lockwood. Contrary to Defendants’ assertion, there was no one “fiduciary of record” for the WIN client accounts. Rather, WIN and Mr. Radano had a concurrent fiduciary duty to the firm’s clients to disclose material information. Given that the Court has concluded that WIN and Mr. Radano are subject to the parameters of the Advisers Act, the Court must now proceed to an analysis of the claims against Defendants. B. Section 203(f) of the Advisers Act The SEC alleges that the actions of Defendants WIN and Mr. Radano with respect to Mr. Bolla subsequent to the imposition of his bar constituted a fundamental violation of their duties under Section 203(f) of the Advisers Act, with WIN acting as the primary violator and Mr. Radano acting as an aider and abettor to the violation. Section 203(f) makes it unlawful for any person who has been suspended or barred from being associated with an investment adviser, from willfully becoming or being associated with an investment adviser without the consent of the Commission. See 15 U.S.C. § 80b-3(f). This Section also makes it unlawful for any investment adviser to “permit such a [barred] person to become, or remain, a person associated with him without the consent of the Commission, if such investment adviser knew, or in the exercise of reasonable care, should have known of such order.” Id. Section 202(a)(17) of the Advisers Act defines “person associated with an investment adviser” as “any partner, officer, or director of such investment adviser (or any persons performing similar functions), or any persons directly or indirectly controlling or controlled by such investment adviser, including any employee of such investment adviser....” 15 U.S.C. § 80b-2(a)(17). In order to establish a violation of Section 203(f), the SEC must establish by a preponderance of the evidence that WIN and Mr. Radano “permitted” Mr. Bolla to remain associated with the firm after he was barred by the SEC from acting as an investment adviser. Id.; Steadman v. Sec. & Exch. Comm’n, 450 U.S. 91, 96, 101 S.Ct. 999, 67 L.Ed.2d 69 (1981); Sec. & Exch. Comm’n v. Savoy Indus., Inc., 587 F.2d 1149, 1169 (D.C.Cir.1978); Sec. & Exch. Comm’n v. Moran, 922 F.Supp. 867, 888 (S.D.N.Y.1996). To the consternation of this Court and the delight of lexicographers everywhere, the Advisers Act does not define the term “permit” as it applies to the prohibitions detailed in Section 203(f). ‘When there is no indication that Congress intended a specific legal meaning for the term, the court may look to sources such as dictionaries for a definition.” United States v. Mohrbacher, 182 F.3d 1041, 1048 (9th Cir.1999) (citing Musearello v. United States, 524 U.S. 125, 118 S.Ct. 1911, 1914-16, 141 L.Ed.2d 111 (1998) (relying upon dictionaries, literature, and newspaper reports, in addition to legislative history, to ascertain the meaning of the word “carry”)). Much like the typical “battle of the experts,” the parties in this case have confronted the Court with a veritable “battle of the dictionaries.” Defendants, citing to Websters II New College Dictionary (1995) at 819, emphasize the active. requirement of “permit”: “to consent to; to allow; to give permission to or for; to authorize; to afford opportunity to.” Defs.’ Proposed Findings of Fact ¶ 60. In contrast, the SEC focuses on a more passive definition of “permit,” quoting the Oxford English Dictionary.- “to allow, suffer, give leave; not to prevent.” Pl.’s Proposed Findings of Fact at 12. For the sake of completeness, the Court notes that Black’s Law Dictionary (7th ed.1999) at 1160, defines “permit” as “[t]o consent to formally; [t]o give opportunity for <lax security permitted the escape >”; “[t]o allow or admit of’; Merriam Webster’s Collegiate Dictionary (10th ed.1997) at 866, defines “permit” as “to consent to expressly or formally; to give leave: authorize; to make possible: to give opportunity: to allow”; and The American Heritage College Dictionary (3d ed.1997) at 1018, defines “permit” as “[t]o allow the doing of (something); consent to; [t]o grant leave or consent to (someone); authorize; [t]o afford opportunity or possibility for.” Regardless of whether Congress intended to emphasize the “active” or “passive” nature of “permit” for the purposes of Section 203(f), Defendants contend “far from ‘permitting’ Bolla to remain associated with WIN, it is undisputed that Robert Radano took affirmative, action to notify Lockwood of the bar.” Defs.’ Proposed Findings of Fact ¶ 61. According to Defendants, “[njothing could be more antithetical to the notion that WIN ‘permitted’ Bolla’s continued association than the fact that Mr. Radano, acting on behalf of WIN, informed the one entity that made Bolla’s ‘advisory’ work possible — Lockwood.” Id. Defendants further stress that the SEC’s claim that Mr. Radano’s goal was to permit Mr. Bolla “to remain associated with the firm after his bar,” PL’s Proposed Findings of Fact ¶ 13, and to “manage WIN’s finances,” id. ¶ 14, defies logic; rather, given Mr. Radano’s affirmative decision to contact Lockwood and notify them of the bar — of which it would not have been aware of otherwise — and his repeated protests of Lockwood’s continued disbursements to Mr. Bolla after it had knowledge of his bar, Defendants