SEC Charges Sponsor of Feeder Fund that Invested in Ponzi Scheme
The SEC has filed suit against two individuals that sponsored a feeder fund into a Ponzi scheme. The SEC alleges that the defendants knew or reckless in not knowing that the legal settlements purchased by the fund did not exist. The SEC charges that the defendants did not follow procedures described in the PPM including obtaining underlying documentation and engaging a third-party verifier. The SEC charges violations of the various securities anti-fraud laws and regulations.