Last week, the Securities and Exchange Commission announced that it had charged an investment advisory firm and its owner with fraud for lying to investors numerous times, while raising money for a hedge fund. The complaint filed by the SEC alleges that Moses Investment Company and its principal, Michael S. Moses, raised roughly $1 million for a private fund they managed, WAKE Fund I LP, by lying to investors from November 2013 to April 2014.
It is alleged that the defendants lied about Moses’ past experience as a trader and portfolio manager, the safety of investments, Moses’ personal investment in the fund, and the performance of the defendant’s investment strategies. As an example, the SEC claims that Moses and his company claimed that Moses worked as a Portfolio Manager in 2007 for a $750 million global macro fund. It is alleged that Moses toted a 24% trading return during the 2008 financial crisis.
In reality, the SEC claims that Moses had little fund portfolio management experience, lied about his returns and used a risky investment strategy that he did not disclose to investors. In return, the fund experienced a near-total loss of assets. The SEC will attempt to seek permanent injunctions and disgorgement plus interest. At this point in time, the defendant remains innocent until proven guilty in a court of law.