On February 2nd, 2018, the Securities and Exchange Commission pressed charges against a hedge fund manager for fraud, ending an ongoing scheme.
The SEC claims that since 2014 or earlier, the adviser collectively raised more than $5.3 million from at least six investors by misrepresenting: (1) the adviser’s prior money-management and industry experience, and (2) the size of the adviser’s operations, including inflated assets under management calculations. In addition, the SEC claims that the same adviser and his firm misused investor funds to fund securities and to trade in the adviser’s own personal brokerage account. It was also discovered that the investment adviser lied about his education, prior work experience and apparent criminal record.
All findings for this case were exposed during an SEC examination.
With assistance from the Federal Bureau of Investigation, the U.S Attorney’s Office for the Southern District of New York has filed parallel criminal charges against the investment adviser.
WHAT DOES THIS MEAN FOR ME?
Although this case is an extreme example, it nevertheless serves as an excellent reminder of the importance of ensuring the accuracy of marketing material, including the calculation of return and assets under management, and retaining supporting documentation. Please contact Fairview with any questions or concerns about this and how it relates to your firm.