SEC Claims Hedge Fund Lied to Directors, Administrator and Investors
The SEC has filed a civil enforcement action against a hedge fund and its principals alleging securities fraud for misusing fund proceeds. The SEC charges that the investment manager lied to the fund’s independent directors, third party administrator, and investors in order to perpetrate the fraud. The SEC alleges that the defendants looted the fund by making certain payments disguised as reimbursements of organizational expenses and by causing the fund to make loans to the management company. According to the complaint, the defendants outright lied to the independent directors, the third party administrator, and investors when questioned. The SEC also accuses the firm of violating the PPM and filing an ADV with inflated AUM figures.