On December 23, 2014, the ALJ found that Grossman, the former principal of a registered investment adviser, violated certain antifraud, broker-dealer, and investment adviser provisions of the federal securities laws by, among other things, making misrepresentations and omissions of material fact to his advisory clients when he advised them to invest in funds as to which he had an economic conflict of interest. For these violations, the ALJ ordered Grossman to pay a $1.55 million civil penalty, to pay approximately $3 million in disgorgement plus prejudgment interest, and to cease and desist from further violations of the securities laws. The ALJ also barred him from association with the securities industry.

Respondent appealed, challenging only the imposition of sanctions.

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