BOSTON (HedgeWorld.com)–The Secretary of Massachusetts, William F. Galvin, sued Cantella Securities Inc., a Boston-based securities firm, over alleged improper sales of hedge funds to unsophisticated investors that resulted in losses totaling US$3.5 million.
The hedge fund losses allegedly wiped out the retirement savings for some of the 41 Cantella customers involved, according to the complaint filed by the securities division of the Massachusetts Secretary’s office. The complaint states that more than 60% of the fund investors were unsophisticated, unaccredited investors, the general qualifier needed to invest in an unregistered hedge fund.
The suit concerns two hedge funds, Hercules Hedgehog Fund and Agrippa Fund, which allegedly were managed and sold by two inexperienced registered representatives with the approval of Cantella. The two managers of the funds, James Pangione and Timothy Rassias, were named as defendants in a Massachusetts-filed suit in August concerning the Hercules Hedgehog fund and their firm Hercules Capital Management, Worcester, Mass. .
Cantella executives declined comment.
Mr. Galvin’s office seeks payment by Cantella of an administrative fine, recision of losses to customers of the two funds and a cease and desist order to prevent further violations, the complaint shows. The suit arises from alleged violations of the state’s Uniform Securities Act and related regulations.