Federal Prep

Includes form instructions and options. Options shown in this text do not identify which boxes were selected.

GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an 
INITIAL OR
AMENDED response used to report details for affirmative responses to Items 11.C., 11.D.,
11.E., 11.F. or 11.G. of Form ADV.
Regulatory Action
Check item(s) being responded to:
11.C(1)
11.C(2)
11.C(3)
11.C(4)
11.C(5)
11.D(1)
11.D(2)
11.D(3)
11.D(4)
11.D(5)
11.E(1)
11.E(2)
11.E(3)
11.E(4)
11.F.
11.G.
Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File
with a completed Execution Page. 
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the
same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP.
PART I
A.  The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). 
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
CRD
Number:
1731292
This advisory affiliate is 
a Firm
an Individual
Registered:
Yes
No
Name:
KERPER, MICHAEL, ANDREW
(For individuals, Last, First,
Middle)
This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser.
This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is
registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the
adviser's or advisory affiliate's favor.
If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item
11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any
event listed in Item 11 that occurred more than ten years ago.
This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the
circumstances: 
B.
If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to

the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided.
 Yes
 No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records.
PART II
1.  Regulatory Action initiated by:
SEC   
Other Federal   
State   
SRO
Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) 
2.
Principal Sanction:
Censure
Other Sanctions: 
FEDERAL PREP SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $200,000, AND MR. MICHAEL KERPER SHALL PAY A CIVIL MONEY PENALTY IN
THE AMOUNT OF $80,000. IN ADDITION, MR. MICHAEL KERPER SHALL NOT ACT IN A COMPLIANCE CAPACITY WITH ANY INVESTMENT ADVISER, BROKER,
DEALER, MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.
3.
Date Initiated (MM/DD/YYYY): 
09/26/2024
 Exact
 Explanation
If not exact, provide explanation:
4.
Docket/Case Number:
3-22212
5.
Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable):
6.
Principal Product Type:
Other Product Types: 
7.
Describe the allegations related to this regulatory action (your response must fit within the space provided):
THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE
AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST FEDERAL PREP ADVISORS, INC. AND MICHAEL KERPER
(COLLECTIVELY "RESPONDENTS"). IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENTS HAVE SUBMITTED OFFERS OF
SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. THE COMMISSION FINDS THAT SINCE AT LEAST JUNE 2020, IN ADVISING MORE
THAN 300 CLIENTS TO ROLL OVER ASSETS TOTALING MORE THAN $80 MILLION FROM THRIFT SAVINGS PLAN ("TSP")1 ACCOUNTS TO ADVISORY
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS"), COMMISSION-REGISTERED INVESTMENT ADVISER FEDERAL PREP ADVISORS, INC. ("FEDERAL PREP") AND
ITS PRINCIPAL, MICHAEL KERPER ("KERPER") PROVIDED INFORMATION REGARDING TSP FEES, TSP INVESTMENT OPTIONS, AND IRA MONEY MANAGER
FEES THAT WAS FALSE OR THAT OMITTED MATERIAL FACTS. THIS INCLUDED TELLING CLIENTS THAT TSP FEES WERE .50% WHEN IN FACT TSP FEES
WERE APPROXIMATELY ONE-TENTH THAT AMOUNT AND CONTINUING TO PROVIDE THAT INACCURATE INFORMATION TO CLIENTS AFTER THE
COMMISSION'S DIVISION OF EXAMINATIONS ("SEC EXAMS") NOTIFIED KERPER OF THE INACCURACY. MOREOVER, DESPITE THE LOW COSTS OF THE
TSP AND THE SIGNIFICANTLY HIGHER COSTS ASSOCIATED WITH THE ADVISORY IRA RECOMMENDED BY FEDERAL PREP AND KERPER-FEDERAL PREP
CLIENTS PAY ADVISORY FEES PLUS THIRD-PARTY MONEY MANAGER AND UNDERLYING INVESTMENT FEES THAT OFTEN TOTAL 1.50% TO OVER 2.00%
PER YEAR-FEDERAL PREP AND KERPER DID NOT ADEQUATELY CONSIDER ANY TOTAL FEE COMPARISONS IN ADVISING CLIENTS TO ROLL ASSETS OUT OF
THEIR TSP ACCOUNTS, NOR DID FEDERAL PREP OR KERPER HAVE AN ADEQUATE UNDERSTANDING OF THE TOTAL COSTS ASSOCIATED WITH THE
ROLLOVER INVESTMENT STRATEGY THAT THEY RECOMMENDED TO CLIENTS. FEDERAL PREP AND KERPER ALSO FAILED TO ADEQUATELY CONSIDER, AND
LACKED AN ADEQUATE UNDERSTANDING OF, THE INVESTMENT OPTIONS AVAILABLE WITHIN THE TSP AND HOW THOSE OPTIONS COMPARED TO THE
INVESTMENTS THAT THEY RECOMMENDED CLIENTS MAKE IN A ROLLOVER ADVISORY IRA. KERPER IS THE CHIEF EXECUTIVE OFFICER ("CEO"), CHIEF
OPERATING OFFICER ("COO"), AND AN INVESTMENT ADVISER REPRESENTATIVE ("IAR") OF FEDERAL PREP. KERPER WAS ALSO FEDERAL PREP'S CHIEF
COMPLIANCE OFFICER ("CCO") UNTIL MAY 21, 2024 WHEN HE STEPPED DOWN FROM THE CCO POSITION AND FEDERAL PREP RETAINED A NEW CCO
WHO HAD PRIOR EXPERIENCE WORKING IN A COMPLIANCE CAPACITY. FEDERAL PREP FAILED TO, AND KERPER TOOK NO ACTION TO, ADOPT AND
IMPLEMENT WRITTEN POLICIES AND PROCEDURES INTENDED TO ENSURE THAT FEDERAL PREP ADHERED TO THE FIDUCIARY DUTY THAT IT OWED TO
CLIENTS, INCLUDING WHEN PROVIDING ROLLOVER OR OTHER INVESTMENT ADVICE. FOR EXAMPLE, DESPITE HAVING POLICIES AND PROCEDURES
REQUIRING THAT THEY DO SO, FEDERAL PREP AND KERPER DID NOT FILL OUT THE INVESTOR PROFILE FORM THAT WAS SPECIFIED IN FEDERAL PREP'S
POLICIES AND PROCEDURES AND THAT IT SAID IT WOULD USE TO SUPERVISE AND DIRECT CLIENT INVESTMENTS, NOR DID THEY PREPARE A
CHECKLIST TO DOCUMENT WHETHER THEIR ROLLOVER ADVICE WAS IN THE BEST INTEREST OF THEIR CLIENTS. FEDERAL PREP ALSO FAILED TO
RETAIN, AND HAD NO WRITTEN POLICIES AND PROCEDURES REGARDING, TEXT MESSAGES SENT OR RECEIVED BY IARS TO OR FROM CLIENTS AND
PROSPECTIVE CLIENTS RELATING TO ADVICE GIVEN OR PROPOSED TO BE GIVEN, DISBURSEMENT OF FUNDS OR SECURITIES, OR THE PLACING OR
EXECUTION OF SECURITIES TRANSACTIONS. AS A RESULT, AND AS DETAILED BELOW, FEDERAL PREP WILLFULLY VIOLATED SECTIONS 206(2), 206(4),
AND 204 OF THE ADVISERS ACT AND RULES 206(4)-7 AND 204-2 THEREUNDER, AND KERPER WILLFULLY VIOLATED SECTION 206(2) OF THE ADVISERS
ACT AND CAUSED FEDERAL PREP'S VIOLATIONS OF SECTIONS 206(4) AND 204 OF THE ADVISERS ACT AND RULES 206(4)-7 AND 204-2 THEREUNDER.
8.
Current Status?      
 Pending
 On Appeal
 Final
9.
If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.

10. How was matter resolved:
Order
11. Resolution Date (MM/DD/YYYY):
09/26/2024
 Exact
 Explanation
If not exact, provide explanation:
12. Resolution Detail:
A.  Were any of the following Sanctions Ordered (check all appropriate items)?
 Monetary/Fine Amount: $ 200,000.00
 Revocation/Expulsion/Denial
 Disgorgement/Restitution
 Censure
 Cease and Desist/Injunction
 Bar
 Suspension
B.
Other Sanctions Ordered:
FEDERAL PREP SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $200,000, AND MR. MICHAEL KERPER SHALL PAY A CIVIL MONEY PENALTY
IN THE AMOUNT OF $80,000. IN ADDITION, MR. MICHAEL KERPER SHALL NOT ACT IN A COMPLIANCE CAPACITY WITH ANY INVESTMENT ADVISER,
BROKER, DEALER, MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATION.
Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal,
Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to
requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion
of penalty was waived: 
FIRM RETAINED AN OUTSIDE CCO PRIOR TO SETTLEMENT AGREEMENT, AND ICC AS REQUIRED PER THE SETTLEMENT AGREEMENT. FIRM AND MR.
MICHAEL KERPER PAID PENALTY MONEY PER THE SETTLEMENT AGREEMENT.
13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response
must fit within the space provided).
FEDERAL PREP SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $200,000, AND MR. MICHAEL KERPER SHALL PAY A CIVIL MONEY PENALTY IN
THE AMOUNT OF $80,000. IN ADDITION, MR. MICHAEL KERPER SHALL NOT ACT IN A COMPLIANCE CAPACITY WITH ANY INVESTMENT ADVISER, BROKER,
DEALER, MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.