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Day: February 12, 2018

Court Enters Judgment against Fund Adviser for Resume Inflation

The United States District Court for the District of Colorado entered a default judgment against a state-registered fund manager for misrepresenting his experience and credentials, among other false statements.  As part of his fund-raising efforts, the fund manager claimed to have extensive portfolio management experience including successful management of several large private funds.  The SEC alleges that, although the defendant worked for the organizations referenced, he never served as a portfolio manager and generally acted in minor consulting roles unrelated to portfolio management.  Additionally, the SEC charges that the defendant made unsubstantiated performance claims.

OUR TAKE: When you engage in resume inflation to raise money, you have engaged in securities fraud.  You also run the risk of a criminal prosecution under 10b-5.