A New York investment adviser settled SEC charges of concealing losses in its flagship hedge fund and selling fake loan assets to clients.
According to the Complaint filed in the U.S. District Court for the Southern District of New York, the investment adviser defrauded its clients by:
- hiding losses through (i) inflating the value of certain defaulted trade finance loans and (ii) replacing defaulted loans with fake loans; and
- selling those overvalued and/or fake trade finance loans to clients.
The SEC alleged that the illicit conduct began in 2007 and resulted in the sale of over $60 million worth of fake loan assets to clients.
To settle the charges, the investment adviser agreed to a bifurcated settlement that permanently enjoins it from future related violations. Additionally, the SEC revoked the investment adviser's registration.