Bluestone Capital Management, Llc

Allegations: THIS DISCIPLINARY ACTION CONCERNS BLUESTONE'S VIOLATIONS OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH THE FINANCIAL STATEMENT AUDITS OF A PRIVATE FUND THAT BLUESTONE ADVISED. THE FUND IN QUESTION WAS IN LIQUIDATION. BLUESTONE FAILED TO HAVE THE REQUIRED AUDITS PERFORMED AND TIMELY DISTRIBUTE ANNUAL AUDITED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") TO INVESTORS IN A PRIVATE FUND THAT IT ADVISED. IN ADDITION, BLUESTONE DID NOT PROPERLY DESCRIBE THE STATUS OF ITS FUND'S FINANCIAL STATEMENT AUDITS WHEN FILING ITS FORMS ADV AND DID NOT UPDATE CERTAIN RESPONSES IN ITS FORM ADV ANNUAL UPDATING AMENDMENTS FOR MULTIPLE YEARS AS REQUIRED BY THE FORM ADV INSTRUCTIONS. THESE FAILURES RESULTED IN VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-2 THEREUNDER, COMMONLY REFERRED TO AS THE "CUSTODY RULE," AND SECTION 204(A) AND RULE 204-1(A) THEREUNDER, WHICH REQUIRED BLUESTONE TO UPDATE CERTAIN INFORMATION ABOUT BLUESTONE'S PRIVATE FUND AUDITS IN ITS FORMS ADV. THE ADVISER PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF $75,000 TO THE COMMISSION FOR TRANSFER TO THE GENERAL FUND OF THE UNITED STATES TREASURY, SUBJECT TO THE SECURITIES EXCHANGE ACT OF 1934 SECTION 21F(G)(3). Status: Final Sanction Detail: A FINE OF $75,000 WAS IMPOSED AND BLUESTONE SATISFIED ITS PAYMENT OBLIGATION. Summary: BLUESTONE SHALL, WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $75,000 TO THE COMMISSION FOR TRANSFER TO THE GENERAL FUND OF THE UNITED STATES TREASURY, SUBJECT TO THE SECURITIES EXCHANGE ACT OF 1934 SECTION 21F(G)(3). IF TIMELY PAYMENT IS NOT MADE, ADDITIONAL INTEREST SHALL ACCRUE PURSUANT TO 31 U.S.C. §3717. BLUESTONE HAS SATISFIED ITS PAYMENT OBLIGATIONS.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, SHEVLAND CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT HE MADE NEGLIGENT MISREPRESENTATIONS ABOUT THE PERFORMANCE OF TWO PRIVATE EQUITY FUNDS (THE FUNDS) TO INVESTORS. THE FINDINGS STATED THAT SHEVLAND CAUSED THE FUNDS TO INVEST MORE THAN $20 MILLION (INCLUDING SOME OF HIS OWN MONEY) IN A SEPARATE PRIVATE EQUITY FUND (THE MASTER FUND), WHICH WAS MANAGED BY A FORMER EMPLOYER OF SHEVLAND. THE FUNDS CREATED DOCUMENTS THAT CONTAINED MATERIALLY INACCURATE PERFORMANCE RESULTS, WHICH SHEVLAND DISTRIBUTED AND DIRECTED OTHERS AT THE FUNDS TO DISTRIBUTE TO INVESTORS ON A REGULAR BASIS. TO PREPARE THESE DOCUMENTS, THE FUNDS RELIED ON INFORMATION THAT SHEVLAND RECEIVED FROM THE MASTER FUND, INCLUDING UNAUDITED FINANCIALS CLAIMING THAT THE MASTER FUND EARNED CONSISTENT POSITIVE MONTHLY RETURNS AND REALIZED AN ANNUAL RATE OF RETURN, NET OF FEES, EXCEEDING 80 PERCENT DURING ONE YEAR. SHEVLAND FAILED TO ACT WITH DUE CARE UPON LEARNING OF MATERIAL DISCREPANCIES IN THE FINANCIAL RESULTS REPORTED BY THE MASTER FUND. IN ADDITION, CERTAIN OF THE MASTER FUND'S MONTHLY REPORTS DID NOT ACCURATELY REFLECT THE FUNDS' INVESTMENT. SHEVLAND DID NOT ASK ANYONE AT THE MASTER FUND ABOUT THESE DISCREPANCIES OR TAKE ANY OTHER STEPS TO INVESTIGATE THEM. INSTEAD, SHEVLAND NEGLIGENTLY CONTINUED TO DIRECT OTHERS AT THE FUNDS TO USE THE MASTER FUND'S CLAIMED FINANCIAL RESULTS TO CREATE DOCUMENTS THAT HE AND OTHERS DISTRIBUTED TO FUND INVESTORS. THOSE DOCUMENTS MATERIALLY OVERSTATED THE PERFORMANCE OF THE FUNDS. SUBSEQUENTLY, THE MANAGER OF THE MASTER FUND WAS ARRESTED AND CHARGED WITH SECURITIES FRAUD IN CONNECTION WITH HER OPERATION OF THE MASTER FUND. THE MASTER FUND IS SUBJECT TO A RECEIVERSHIP AND LOSSES TO INVESTORS IN THE FUNDS HAVE YET TO BE ASCERTAINED. Status: Final Sanction Detail: ALL SERIES LICENSES HAVE BEEN SUSPENDED FROM 03/04/2024 - 03/03/2025. Summary: MR. SHEVLAND WAS FINED $10,000 AND AND HIS APPLICABLE LICENSES SUSPENDED FROM 03/04/2024 - 03/03/2025