- Father and son team inflated value of funds
- Represented selves, not fraudster, as funds' day to day manager
The Securities and Exchange Commission announced on 11 January that it had charged two Florida based investment advisers misleading investors about the financial condition of three hedge funds they managed, and misrepresenting that they controlled the funds' investment and trading activities when in fact they were being handled by another party – one Arthur G. Nadel.
In its complaint (http://tinyurl.com/ybap33k) the SEC alleged that Neil V. Moody and his son, Christopher D. Moody, distributed offering materials, account statements, and newsletters to investors that misrepresented the hedge funds' historical investment returns and overstated their asset values by as much as $160 million.
It said that the Moodys had based their materials on grossly overstated performance numbers that Nadel created and provided to them and that they had "failed to independently verify the accuracy of the figures despite multiple red flags, and relied exclusively on Nadel's inaccurate information when communicating with investors."
The father and son team, had, the complaint read, made "reckless violations of the anti-fraud provisions of the federal securities laws."
Nadel had himself been charged with fraud (http://tinyurl.com/ygodtwm) in January 2009, for allegedly overstating the value of funds which he managed by over US$300 million.
In its complaint against the Moodys, the SEC is seeking "permanent injunctions, financial penalties, and disgorgement of illegal gains." It says that without admitting or denying the SEC's allegations, the Moodys have consented to permanent injunctions against future securities fraud violations, and "also consented to the entry of a Commission order that will bar them for five years from associating with any investment adviser."
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