Home » May 2014 » Archives for May 30, 2014

Day: May 30, 2014

Unregistered Fund Manager Charged with Securities Fraud

The SEC and the U.S. Attorney have charged an unregistered fund manager with securities fraud for misrepresenting to investors a long-short trading strategy that ultimately failed and developed into a Ponzi-scheme.  The SEC alleges that the defendant’s trading lost money, but he never stopped taking money to pay office and personal expenses and to reimburse other investors.  The SEC also claims that the defendant delivered phony account statements to hide his activity.  The SEC cites violations of the Advisers Act’s antifraud rules.
OUR TAKE: The long arm of the law can reach advisers even if they are not registered because the Advisers Act (and the Exchange Act) governs fraud in securities markets whether a not a person is registered.