Adviser Deleted Database Information after Receiving SEC’s Evidence Preservation Letter
The SEC has obtained an asset freeze against an investment adviser accused of lying to investors, misappropriating assets, and destroying evidence. The SEC asserts that the defendant lied to investors about his credentials, investments, and performance, including claiming that the fund had 37 months of positive performance. The SEC also contends that the defendant stole client assets and used them to pay his divorce attorneys, among other personal expenses. The SEC alleges that the defendant deleted information on a third party hedge fund database after receiving an SEC letter requiring him to preserve documents and records related to an ongoing investigation. The defendant has asserted his 5th Amendment rights against self-incrimination.
Once a defendant destroys evidence after receiving a preservation letter, you can forget about any middle-ground negotiated settlement. The SEC will come hard and invite their friends at the Justice Department to join the party.