High‑Profile Risk Management Misrepresentation Could Personally Cost Portfolio Manager $13.6 Million

The SEC and CFTC previously settled enforcement proceedings against an SEC-registered investment adviser and its CEO, co‑founder and majority owner in connection with alleged material misrepresentations about risk management procedures made to investors in a fund the manager operated, which lost more than $700 million. Concurrently with the settlements, the regulators also commenced parallel civil enforcement actions against the fund’s senior portfolio manager. A jury recently found the portfolio manager liable for non-scienter-based securities, investment adviser and commodities fraud. The SEC and CFTC are now asking the court to impose more than $13.6 million in monetary sanctions on the portfolio manager. This article reviews the trial verdict and the requests for sanctions. See “SEC and CFTC Impose Stiff Penalties on Adviser for Failing to Follow Disclosed Risk Management Policies” (Feb. 20, 2020).

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