The Securities and Exchange Commission (SEC) has charged an investment advisory firm and its manager with fraud for allegedly lying to investors while raising money for a hedge fund.
The agency has alleged that Colorado-based Moses Investment Company (MIC) and its principal Michael S. Moses raised around $1 million for a private fund by marketing Moses’s portfolio management and trading experience, past performance and investor safety.
It alleged that in raising money for the fund, called the WAKE Fund I, Moses claimed he had run a $750 million global macro strategy in 2007 and that during the 2008 financial crisis he returned 24% through trading.
The SEC alleges that, in reality, Moses had limited fund management experience, lied about his investment returns, and employed a risky investment strategy, counter to representations that the strategy was safe and would involve limited downside risk.
According to the agency’s complaint, which was filed with the US District Court for the District of Colorado, Moses and MIC began soliciting investments in WAKE fund in November 2013. Ultimately, seven individuals invested a total of approximately $974,741 between January and April 2014.
The complaint says that Moses and MIC traded WAKE fund assets from February 2014 through to May 2015, by which point the fund had lost all but $8,868 of investors’ money.
While Moses claimed to have been a portfolio manager on the global macro fund for an Atlanta-based firm, he in fact worked there as a contractor for a six-month period and did not manage a $750 million fund, the SEC said.
To read the full SEC complaint, click here.