UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Arthur S. Hoffman ("Respondent"). On August 8, 2022, a final judgment was entered by consent against Hoffman, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Arthur S. Hoffman, Civil Action No. 2:22-cv-00296 in the United States District Court for the District of Arizona. The Commission's complaint alleged that, while an associated person of a registered investment adviser and registered broker-dealer firm, Hoffman defrauded eight clients by failing to disclose compensation he received from a private issuer while recommending the issuer's securities to those clients, and, in at least one instance, misrepresenting the extent of the compensation he received from the issuer. The complaint alleged that Hoffman also took steps to conceal his misconduct from his associated firm's supervision, and to mislead his clients about that firm's role in supervising his recommendations. The complaint further alleged that Hoffman's deception led clients to invest a total of more than $650,000 with the private issuer, and that clients lost over $610,000 as a result of those investments.

Order

Bar (Permanent)

Association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent or NRSRO

Indefinite

9/15/2022

Participating in any offering of a penny stock

Indefinite

9/15/2022

Penny Stock Bar

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission (the "Commission"), for its Complaint against Hoffman, alleges that he breached his fiduciary to and defrauded his advisory clients by soliciting investments in Membership Units without disclosing his financial conflicts of interest and, in one instance, by misrepresenting the compensation he received from a company and falsely claiming that it was limited by his role as an adviser of his firm. Hoffman also defrauded his advisory clients by hiding his company-related activities from his firm and thereby preventing the firm from halting his activity of recommending securities to clients that were not permitted by the firm's policies and procedures, including by using an email address outside of the firm's supervision to communicate with clients about the company, providing false and misleading information to the firm about his outside business activities, providing false and misleading information to his firm about wire transfers from clients to the company, and persuading two clients not to discuss his involvement in recommending the Membership Units when the firm contacted those clients about their wire transfers. By engaging in this conduct, Hoffman has violated, and unless restrained and enjoined, is reasonably likely to continue to violate, Sections 206(1) and (2) of the Advisers Act. In the offer or sale of securities, Hoffman made materially false and misleading statements to prospective and/or actual investors by soliciting investments in the Membership Units without disclosing his financial conflicts of interest and, in one instance, by misrepresenting the compensation he received from a company and falsely claiming that it was limited by his role as a firm adviser. In addition, Hoffman engaged in a scheme to defraud whereby he hid his company-related activities from the firm by using an email address outside of the firm's supervision to communicate with clients about the company, providing false and misleading information to the firm about his outside business activities, providing false and misleading information to his firm about wire transfers from clients to the company, and persuading two clients not to discuss his involvement in recommending the Membership Units when the firm contacted those clients about their wire transfers. By reason of the foregoing, Hoffman has violated, and unless restrained and enjoined will continue to violate, Sections 17(a) of the Securities Act. In addition, Hoffman violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act and Rules 10b-5(a), 10b-5(b), and 10b-5(c) thereunder by committing fraud in connection with the purchase and sale of securities.

Judgment Rendered

Civil and Administrative Penalty(ies)/Fine(s)

Disgorgement

$160,000.00

Monetary Penalty other than Fines

Injunction

Undertakings

Arizona Corporation Commission - Securities Division

From at least April 2019 through December 2019, Hoffman and ICA solicited individuals, including Ameriprise clients, to invest in securities in the form of investment contracts issued by ZIMA Digital Assets, LLC ("Zima"), an alleged Ponzi scheme and investment product not approved to sell by Ameriprise. During the relevant time period above, Hoffman and ICA sold investments in Zima to at least 8 investors, totaling at least $866,000. Zima's securities were not registered with the Commission. Arthur Hoftinan ("Hofiinan") is an Arizona resident and has been an Arizona resident since at least 2000. From on or about November 18, 2016, through May 15, 2020, Hofiinan was a registered securities salesman with the Commission (CRD #3193754) in association with Ameriprise Financial Services, LLC, ("Ameriprise"). Hoffman has not been licensed by the Commission as an investment adviser representative since 2016. ICA Financial Services, LLC d/b/a Integrity Capital Advisors ("ICA") is a limited liability company organized under the laws of the State of Arizona on May 5, 2009. ICA is a member-managed company and Hoflinan has been the sole member since May 25, 2010. From November 2016 to December 2019, ICA was an Ameriprise Branch Office (Branch CRD #64956l), and Hoffman was the Person-In-Charge of the ICA Branch. ICA is neither licensed by the Commission as an investment adviser nor registered as a securities dealer. From at least April 2019 through December 2019, Hoffman and ICA solicited individuals, including Ameriprise clients, to invest in securities in the form of investment contracts issued by ZIMA Digital Assets, LLC ("Zima"), an alleged Ponzi scheme and investment product not approved to sell by Ameriprise. During the relevant time period above, Hoffman and ICA sold investments in Zima to at least 8 investors, totaling at least $866,000. Zima's securities were not registered with the Commission. On November 17, 2016, Hoffman and Ameriprise entered into a Franchise Agreement, which allowed HoffMan to operate ICA as an "Amcriprise Independent Financial Advisor Business." Around November 2018, Hoffman became acquainted with two individuals, John Caniso ("Caruso") and Zachary Salter ("Salter"). In July of 2018, Caruso and Salter had co-founded "Zima," a purported cryptocurrency investment fund. After becoming acquainted with Caruso and Salter, Hoffman began to solicit investments in Zima. At least 5 investors were Respondents' Ameriprise clients, and at least one investor was a previous Ameriprise client. Investors were not familiar with Zima before being introduced to it by Hoffman and ICA. On January 19, 2020, the United States Attorney's Office indicted Caruso and Salter in United States District Court for the District of Arizona Cause No. 2:20-cr-00165-JJT. The Indictment alleges Caruso and Salter conspired to commit wire fraud and money laundering through a purported cryptocurrcncy investment fund, Zima. HoffMan continues to be subject to the Commission's jurisdiction for two years after the termination of his registration for the purpose of denying, suspending, or revolting his registration in connection with conduct that began before the termination of his registration.

Consent

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$20,000.00

Restitution

$170,000.00

Claimant alleges former Ameriprise advisor recommended he invest $70k in an outside investment called Zima Digital Assets, LLC on January 25, 2020.

$100,001.00

$35,000.00

Claimants allege their former advisor recommended an unsuitable outside investment in Zima Digital Assets.

$358,183.00

$50,000.00

Claimants allege that beginning on about 4/23/19, respondent Hoffman recommended the claimants invest $172,688.03 in Zima Global Ventures, LLC a/k/a Zima Digital Assets ("Zima"), an alleged fraudulent Ponzi scheme promising unrealistic investment returns.

$172,688.03

$49,500.00

FINRA

Without admitting or denying the findings, Hoffman consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA. The findings stated that FINRA opened an investigation in response to a disclosure filed by Hoffman's member firm, which stated that Hoffman had been suspended for company policy violations related to outside business activities and private securities transactions.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All capacities

Indefinite

5/13/2020

Ameriprise Financial Services, LLC

Discharged

Registered Representative was terminated for company policy violations related to outside business activities and private securities transactions.

Bankruptcy

THE COMPLAINT INCLUDES CLAIMS FOR ARIZONA SECURITIES FRAUD; FRAUD IN PROVISION OF INVESTMENT ADVISORY SERVICES, COMMON LAW FRAUD AND MISREPRESENTATION; BREACH OF FIDUCIARY DUTIES; FRAUDULENT CONCEALMENT; NEGLIGENT MISREPRESENTATION; NEGLIGENCE; NEGLIGENT SUPERVISION; AND DOCUMENT TURNOVER AND ACCOUNTING.

$1,000,000.00

$329,500.00