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SEC Charges Hedge Fund Adviser With Deceiving Investors by Inflating Fund Performance

Posted on May 10, 2018 at 8:50 AM

The SEC charged New York-based investment adviser Premium Point Investments LP with inflating the value of private funds it advised by hundreds of millions of dollars. The SEC also charged Premium Point’s CEO and chief investment officer Anilesh Ahuja as well as Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.

According to the SEC’s complaint:

  • The scheme ran from at least September 2015 through March 2016 and relied on a secret deal where in exchange for sending trades to a broker-dealer, Premium Point received inflated broker quotes for mortgage-backed securities (MBS).  
  • The defendants allegedly used “imputed” mid-point valuations, which were applied in a manner that further inflated the value of securities.
  • This practice allegedly boosted the value of many of Premium Point’s MBS holdings and further exaggerated returns.  
  • The complaint alleges that the defendants overstated the funds’ value in order to conceal poor fund performance and attract and retain investors.

The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges the defendants with fraud, with aiding and abetting fraud, or both. The SEC complaint seeks permanent injunctions, return of allegedly ill-gotten gains with interest, and civil penalties.

The U.S. Attorney’s Office for the Southern District of New York, which conducted a parallel investigation of this matter, today announced charges against Ahuja, Majidi, and Shor.

Read More:
Release
https://www.sec.gov/news/press-release/2018-83" target="_blank">https/www.sec.gov/news/press-release/2018-83

Complaint
http/www.sec.gov/litigation/complaints/2018/comp-pr2018-83.pdf

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