As experts in the field of securities law and regulation and the representation of broker-dealers, the New York securities lawyers of the Securities Lawyer Blog recently reviewed a filing by the Securities and Exchange Commission (SEC) in Massachusetts. In the action, the SEC filed charges against an investment firm and its principal in Boston. The SEC's complaint was filed in the U.S. District Court in Massachusetts and the court quickly issued a temporary restraining order after the SEC sought an order to freeze assets of the investment firm and its hedge fund.
The allegations of the SEC's complaint include charges that the firm misled investors regarding many aspects of its business, including where the funds raised were actually being placed, in this case, allegedly into the money manager's personal bank account.
The purported hedge fund was the magnet to which potential investors were attracted, but according to the SEC, the solicitation was fraught with misleading information that included false statements. These included that: the principal graduated from Harvard University with both undergraduate and graduate degrees; that he worked for a major global investment company in which he grew and managed billions of dollars; that a major auditing firm served as the purported fund's auditor; and that the firm was a British Virgin Islands company.
The SEC's allegations include that by creating the "indicia of legitimacy" using misrepresentations, the principal had ten investors that may have put up at as much as $1.7 million. Some of this was placed into the principal's personal accounts.
The SEC says both the Swiss Financial Market Supervisory Authority and the British Virgin Islands Financial Services Commission has assisted in the matter, which remains under investigation. Both these entities are involved in regulatory compliance, supervision and inspection of financial services businesses operating within their jurisdictions.
The alleged violations in this matter include those under Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8.
The New York law firm of Gusrae Kaplan Nusbaum PLLC represents broker-dealers and firms in matters involving a broad spectrum of issues before all regulatory entities. Please contact our law firm to consult with one of our attorneys in any matter related to securities regulation and compliance, broker-dealer services and representation before all entities involved with the regulation and compliance of the securities industry.
