A former rising star in the hedge fund world has settled, without admitting or denying guilt, Security and Exchange Commission (SEC) charges that her husband, in violation of his company's policies, shared confidential investment recommendations with her and that she failed to reveal the source of the information to her firm's clients.
Nehal Chopra, the founder of Ratan Capital Management, was ordered to pay a $200,000 civil penalty, as was her firm. Her husband, Paritosh Gupta, then a research analyst at competing hedge fund advisor Brahman Capital, was fined $250,000. Gupta worked at Brahman before founding his own hedge fund firm, Adi Capital Management, in 2014. Brahman was fined the same amount for not adequately supervising Gupta.
The SEC charged that Gupta lied in a 2014 SEC filing that neither he nor his wife shared confidential investment information. According to the charges, Gupta emailed Chopra about Brahman's holdings, and urged her to make the same moves.
'For example, in March 2010, Gupta messaged Chopra asking her how big a position Ratan had in a particular security,' the SEC said in its December 5 documents. 'When Chopra responded that it constituted 2.3% of Ratan’s portfolio, Gupta wrote that it should be bigger and she should call him. That day, Ratan purchased additional shares of the security.'
And in November 2011, Gupta emailed Chopra on the day Brahman had begun selling a certain security, telling her to do the same, the SEC said. And at least once, the agency said, Gupta monitored Ratan’s entire portfolio when Chopra was out of the country.
The SEC also alleged that Gupta helped write and edit marketing documents and investor letters for his wife's firm, and also interviewed candidates for jobs there.
Chopra was named a rising star of the hedge fund world by Institutional Investor magazine in 2013 after producing returns of 26.3%, 46.8%, and 22.3% in 2012, 2013 and 2014 respectively, in her firm's main long-short equity hedge fund. In 2015 though, she lost 19%. She is a protege of Julian Robertson Jr., a hedge fund legend and the founder of Tiger Management.
Ratan had $375 million of regulatory assets under management in March, and Adi had $368 million, according to the SEC.