- Hedge Fund Investment Advisory Firm Charged with Fraudulent Fund Valuation
- July 2, 2015
- Law Firm: Sutherland Asbill Brennan LLP - Washington Office
Earlier today, the SEC announced that it has charged a Connecticut-based investment adviser and its two owners with fraudulently inflating the prices of unlisted, thinly-traded residential mortgage-backed securities (RMBS) held in hedge fund portfolios managed by the adviser.
According to the press release, the adviser told its investors and its auditor that it obtained independent price quotes for the RMBS held in the portfolios when, in fact, the advisory firm provided inflated, internally-developed valuations of the securities. As a result, the hedge funds paid higher management and performance fees to the investment advisory firm.