Angel Oak Capital Advisors, Llc

Allegations: OPERATING AS A BROKER-DEALER WITHOUT REGISTERING WITH THE SEC. Status: Final Sanction Detail: SANCTIONS AGAINST ANGEL OAK CAPITAL PARTNERS, LLC INCLUDED CEASE AND DESIST, CENSURE, DISGORGEMENT OF $3,054,288, PREJUDGMENT INTEREST OF $237,082, AND A CIVIL MONEY PENALTY OF $375,000, FOR A TOTAL AMOUNT OF $3,666,370. SANCTIONS AGAINST MR. PRABHU INCLUDED CEASE AND DESIST, AND A CIVIL MONEY PENALTY OF $40,000. Summary: ON FEBRUARY 16, 2017, THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE "SEC" OR "COMMISSION") ACCEPTED AN OFFER OF SETTLEMENT FROM ANGEL OAK CAPITAL PARTNERS, LLC ("AOCP") AND ENTERED AN ADMINISTRATIVE ORDER AGAINST IT. THE ORDER, WHILE RECOGNIZING THAT AOCP DID NOT ADMIT OR DENY ANY FINDINGS, CONCLUDED THAT AOCP OPERATED AS A BROKER-DEALER FROM MARCH 2010 UNTIL OCTOBER 2014 WITHOUT REGISTERING WITH THE COMMISSION. THE SEC FOUND THAT AOCP ENTERED INTO AN AGREEMENT WITH PERAZA CAPITAL & INVESTMENT, LLC ("PERAZA") IN LATE 2009 FOR THE PURPOSE OF CONDUCTING A SECURITIES BUSINESS, WITHOUT REGISTERING AS A BROKER-DEALER. TRADERS EMPLOYED BY AOCP IN ITS SECURITIES BUSINESS WERE REGISTERED WITH THE FINANCIAL INDUSTRY REGULATORY AUTHORITY ("FINRA") AS REGISTERED REPRESENTATIVES OF PERAZA, AND AOCP AND PERAZA SPLIT THE COMMISSION REVENUE GENERATED AS A RESULT OF AOCP TRADING ACTIVITIES. THE SEC DETERMINED THAT AOCP AND ITS OWNERS OR EMPLOYEES-WHO WERE NOT REGISTERED AS BROKER-DEALERS OR ASSOCIATED WITH A REGISTERED BROKER-DEALER-WERE INVOLVED IN THE OPERATIONS OF THE SECURITIES BUSINESS AND MADE KEY DECISIONS REGARDING THE BUSINESS. AS REFLECTED IN THE ORDER, THE COMMISSION ACCEPTED AOCP'S OFFER TO DISGORGE PROFITS RECEIVED FROM THE OPERATION OF $3,054,288 PLUS INTEREST, TO PAY A PENALTY OF $375,000 AND TO CEASE AND DESIST FROM THAT ACTIVITY. THE SEC FURTHER ACCEPTED AN OFFER OF SETTLEMENT FROM SREENIWAS PRABHU, AN INDIRECT OWNER OF ANGEL OAK CAPITAL ADVISORS, AND ANOTHER EMPLOYEE, BASED ON THE ALLEGATIONS OF THE SEC THAT THEY CAUSED AOCP TO OPERATE AS AN UNREGISTERED BROKER DEALER. THEY BOTH AGREED TO A CEASE AND DESIST ORDER AND AN ADMINISTRATIVE PENALTY OF $40,000 EACH.

Allegations: INACCURATE DISCLOSURE OF MORTGAGE DELINQUENCY RATES IN CONNECTION WITH A SECURITIZATION. Status: Final Sanction Detail: SANCTIONS AGAINST ANGEL OAK CAPITAL ADVISORS, LLC AND ASHISH NEGANDHI INCLUDED CEASE AND DESIST, CENSURE, AND A CIVIL MONEY PENALTY OF $1,750,000 AND $75,000, RESPECTIVELY. Summary: ON AUGUST 10, 2022, THE SEC ACCEPTED OFFERS OF SETTLEMENT FROM AOCA AND ASHISH NEGANDHI, A FORMER PORTFOLIO MANAGER AT AOCA, AND ENTERED AN ADMINISTRATIVE ORDER AGAINST BOTH AOCA AND MR. NEGANDHI. THE SETTLEMENT AND ADMINISTRATIVE ORDER RELATE TO AOMT 2018-PB1, A SECURITIZATION ISSUED IN 2018. AOMT 2018-PB1 WAS A ONE-OFF, FIRST-OF-ITS-KIND $90 MILLION SECURITIZATION WITH FIX-AND-FLIP LOANS AS THE UNDERLYING COLLATERAL. FIX-AND-FLIP LOANS ARE LOANS MADE TO BORROWERS FOR THE PURPOSE OF PURCHASING, RENOVATING, AND SELLING RESIDENTIAL PROPERTIES. THESE LOANS WERE ORIGINATED BY AN AFFILIATE OF AOCA, ANGEL OAK PRIME BRIDGE, WHICH CEASED ORIGINATING LOANS IN 2019. AOCA AND ITS AFFILIATES HAVE NOT ISSUED ANOTHER SECURITIZATION SOLELY BACKED BY THIS TYPE OF COLLATERAL. THE SEC'S ORDER CONCLUDED THAT AOCA AND MR. NEGANDHI MADE INACCURATE DISCLOSURE OF MORTGAGE DELINQUENCY RATES WHEN REPORTING ON THE PERFORMANCE OF AOMT 2018-PB1 IN VIOLATION OF THE SECURITIES ACT AND THE ADVISERS ACT. THE INACCURACIES RELATED TO THE USE OF FUNDS HELD IN ESCROW ACCOUNTS (FUNDS HELD TO REIMBURSE BORROWERS FOR RENOVATIONS TO THE PROPERTIES) TO CURE LOAN DELINQUENCIES. AOCA AND MR. NEGANDHI DID NOT ADMIT OR DENY THESE FINDINGS. THE ORDER DOES NOT ALLEGE THAT AOCA OR MR. NEGANDHI ACTED WITH FRAUDULENT INTENT. THE SEC ACCEPTED AOCA'S AND MR. NEGANDHI'S OFFERS TO SETTLE THE CASE. AOCA AND MR. NEGANDHI PAID CIVIL FINES OF $1,750,000 AND $75,000, RESPECTIVELY, WERE CENSURED, AND AGREED TO CEASE AND DESIST FROM FUTURE VIOLATIONS.