The Financial Industry Regulatory Authority said Thursday that it has barred two Buffalo, New York-based brokers from the securities industry for fraud in connection with the sale of a hedge fund, the Prestige Wealth Management Fund LP.
The brokers’ misconduct occurred while they were employed with Mid Atlantic Capital Corp.
FINRA’s investigation found that Timothy S. Dembski and Walter F. Grenda made material misrepresentations and omissions to lead investors to believe that the hedge fund was a “growth” fund that would be based on a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund.
However, the fund “was a highly speculative investment, the fund’s chief investment officer had complete control over the investments made, and it was not obligated to follow the computer algorithm,” FINRA states. In the last full month that the fund traded, it lost over 80% of its value.