On September 23, 2011, the SEC settled administrative proceedings against James Peister, the CEO and President of Northstar International Group, Inc., an unregistered investment adviser based in New York, in connection with allegations that Mr. Peister acted to defraud investors in a hedge fund for whom his firm served as general partner and investment adviser.
The SEC charged that Mr. Peister and Northstar, during the period of 2003 through 2009, intentionally overstated the assets of the hedge fund and, by doing so, they provided investors and prospective investors with materially false and misleading information about the fund's track record, and issued false and misleading quarterly reports and financial statements to such investors. According to the SEC, the statements were made at a time when the fund's actual assets were at a state that all of the investors could not be paid back their investment. In spite of the fund's dire financial status and underperformance, Mr. Peister and Northstar continued to solicit new investors using the materially false performance numbers.
To settle the SEC charges, Mr. Peister agreed to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent.