Articles Tagged with hedge fund

shutterstock_175298066The Securities and Exchange Commission announced fraud charges against a registered investment adviser and its owner on allegations of self-dealing and failing to disclose material facts to clients including conflicts of interest, use of investor funds, and the risks of the investments they recommended. The complaint filed in U.S. District Court for the District of Massachusetts, alleges that Lee D. Weiss (Weiss) and Family Endowment Partners, L.P. (FEP) and relief defendants MIP Global, Inc. (MIP Global), Mosaic Enterprises, Inc. (Mosaic Enterprises), Mosaic Investment Partners, Inc. (Mosaic), and Weiss Capital Real Estate Group, LLC (Weiss Capital) recommended their clients invest $40 million in illiquid securities issued by hedge fund FEP Fund I, LP (FEP Fund I) and the Catamaran Holding Fund, Ltd. (Catamaran Fund) without disclosing that Weiss had an ownership interest in the parent company of these entities and received payments from these entities.

The SEC’s complaint further alleges that FEP and Weiss recommended that their clients invest in entities that Weiss owned without disclosing that the investments would be used primarily to benefit FEP. The SEC also alleges that FEP and Weiss advised clients to invest in a consumer loan portfolio while concealing that Weiss would receive half of the clients’ profits from these investments.

Between 2010 and 2012, the SEC alleges that FEP and Weiss advised 11 FEP and caused two FEP affiliated hedge funds to invest more than $40 million in securities issued by subsidiaries of a French company that purportedly had designed methods to reduce the harmful effects of tobacco smoking. According to the SEC, FEP and Weiss had a financial interest in the French company and that Weiss and entities received more than $600,000 in payments from that company shortly after the FEP clients and hedge funds invested in it. However, the SEC stated that Weiss failed to disclose these conflicts of interest to investors.

shutterstock_160304408The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have brought action (FINRA Here, SEC Here) against Timothy Dembski (Dembski) and Walter Grenda (Grenda) concerning allegations that they made false and misleading statements to their clients at Reliance Financial Group (Reliance) an investment advisory firm, in recommending and selling investments in a risky hedge fund called Prestige Wealth Management Fund, LP (Prestige Fund). Also mentioned as a manager of the fund was Scott Stephan (Stephan).

Dembski was a registered broker with FINRA starting in 1995. From October 2006 until March 2011, Dembski was registered with Wall Street Financial Group, Inc. (Wall Street). Thereafter, Dembski was registered with Mid Atlantic Capital Corporation (Mid Atlantic) until August 2013. In January 2011, Dembski co-founded and was the managing partner at Reliance Financial and also co-founded the Prestige Fund.

Grenda has been a registered broker with FINRA since 1981. From October 2006 until March 2011, Grenda was registered with Wall Street. Thereafter, Grenda was registered with Mid Atlantic until July 2013.

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