Rogue Investor Misled SECby Phillip Fleck Anand Systems Inc Launches, Asi Frontdesk, The New
United State (October 23, 2018) - An investor in Finvest Asset Management LLC went rogue and misled the Securities Exchange Commission (SEC) by providing fabricated and false information about hedge fund manager Gad Grieve, in 2008. The rogue investor who is believed to be London based and French connected, attempted to pressurize Grieve to violate a lock-up clause in the fund’s agreement. Lock-up clauses permit fund managers to freeze redemptions in choppy markets, when liquidity becomes challenging, as in 2008 when Lehman Bank collapsed.
The rogue investor’s initiative utilized the services of multiple companies including a hedge fund online research firm who investigates the background of fund managers, to feed fabricated reports to the SEC. Sources indicate that the research company who acted as the investor’s proxy, brands itself as a firm that warns investors about fund blowups, long before they occur. One report showed that the research company used a self proclaimed “Wall of Shame” to advertise its success at identifying managers who have perpetrated fraud.
“The only problem with the “Wall of Shame”, said one hedge fund manager. “Is that its historical.” The posts are made after the victims have been indicted and not all the managers have been found guilty of fraud, let alone any other violation.
The Hedge Fund Research company would use fabricated information to falsely implicate targeted hits for fraud and regulatory violations. The Securities Exchange Commission (SEC), concerned about re-establishing its credibility after the Madoff scandal, welcomed information that would incriminate traders or investment managers on Wall Street. The research company that executed the transfer of information, would receive payment from two sides: the investment company who was initiating the hit contract and the SEC.
Smaller firms with $500 Million AUM or less, in many cases didn’t have the resources to fight a full blown legal battle with the SEC, which often could run into millions of dollars. The result was that they buckled and pushed for a quick settlement, even if they were innocent and had to admit guilt. It was an easy way for traders to eliminate the enemy. A spokesman from an established banking firm on Wall Street said, “No one will say it out loud or admit it, but everyone knows, if you don’t like a fund manager just turn the regulators on him.”
In 2009 the SEC filed a civil action against Grieve and his firm, Finvest Asset Management. The suit was never legally served on Grieve. The SEC chose not to litigate the matter with Finvest Asset Management LLC. Grieve exited the investment industry in 2009 however, a few years later the SEC later took out several ex-parte default judgements against the parties. According to people close to him, Grieve has no plans to return to the investment industry and is pursuing other interests. He could not be reached for comment.
With the appointment of a new SEC chief, Chairman Jay Clayton, practitioners on Wall Street say that the SEC has become more discerning with the information it receives. Accordingly, the-under-the-radar Mafia style hit-operation was effectively shut down. People in the know, say that the scheme would probably never have been formerly sanctioned by SEC officials. The official line is and always will be, “Information is always welcome, but we will investigate it thoroughly.”
Our correspondent for ABC News Agency, Paul Henderson contributed to this article.
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Created on Oct 23rd 2018 13:19. Viewed 457 times.