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March 30, 2018 at 09:43 AM
A federal judge ordered the co-founder and former CEO of investment management firm F-Squared Investments to pay more than $13 million after a federal jury found him liable for making false and misleading statements to investors as the public face of F-Squared.
The Securities and Exchange Commission charged Howard Present and F-Squared in 2014 with misleading investors about the AlphaSector strategy, the flagship product of F-Squared, which Present launched in the wake of the financial crisis. F-Squared agreed to pay $35 million and admit wrongdoing to settle the agency’s charges. After a three-and-a-half week trial, the jury deliberated for less than one day before finding Present liable on all of the agency’s charges against him.
On March 22, the court entered a final judgment and ordered Present to pay disgorgement of $10.8 million plus interest of $1.37 million, and a $1.57 million penalty.
The court found that, based on the evidence presented at trial, “Present’s conduct was egregious,” and that his “misstatements were consistent in message, broadly disseminated and increasingly bold.”
False EDGAR Filer Sentenced to 2 Years in Prison for Fitbit Manipulation Scheme
Robert Murray, a defendant in a pending SEC case, was sentenced to two years imprisonment in connection with a scheme to manipulate Fitbit securities through false filings on the SEC’s EDGAR system. Murray pleaded guilty on Nov. 7.
The criminal charges against Murray arose from the same conduct alleged in the complaint the SEC filed on May 19, the same day the criminal charges were announced.
According to the SEC’s complaint, Murray allegedly purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a sham company sought to acquire Fitbit’s outstanding shares at a substantial premium.
Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. Murray took steps to conceal his identity and actual location, including using an alias to create an email account and using an IP address registered to a company located in another state.
The SEC’s action was stayed pending the outcome of the criminal case.
SEC Stops Ponzi Schemer Targeting Retail Investors
The SEC announced charges and a preliminary injunction and asset freeze against Niket Shah, a New Jersey resident who stole more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.
Based on investor complaints, the SEC moved quickly to investigate and charge Shah. According to the SEC’s complaint, Shah used Spark Trading Group LLC to defraud more than 15 investors into contributing hundreds of thousands of dollars to two funds that Shah marketed. Shah obtained investments for the funds by lying about his success as a trader, Spark Trading’s returns, and how he intended to use investors’ money, including altering financial statements to make the funds appear profitable when they were actually losing money.
