SEC freezes adviser’s assets over alleged $39 million fraud
The Securities and Exchange Commission has obtained an asset
freeze against a Sarasota, Fla.-based investment adviser, Kinetic Investment
Group, and its managing member, Michael Scott Williams, in connection with an
alleged fraud.
Mr. Williams and his firm sold unregistered securities,
raising approximately $39 million from at least 30 investors located mostly in
Florida and Puerto Rico for their purported hedge fund, Kinetics Funds,
according to the complaint filed in the U.S. District Court for the Middle
District of Florida.
The SEC alleges Mr. Williams and the firm made material
misrepresentations to investors, saying that Kinetic Funds’ largest sub-fund
invested solely in U.S.-listed financial products and that at least 90% of its
portfolio was hedged using listed options. Mr. Williams actually invested a
significant part of the sub-fund’s assets in a private start-up company he
owned, and misappropriated at least $6.3 million through undisclosed loans to
himself and his entities, according to the complaint.
A federal granted the SEC’s request for emergency relief,
including an asset freeze and an order for records preservation, against
Kinetic Group, Mr. Williams and a number of companies charged by the SEC as
relief defendants. The court also granted the SEC’s request to appoint a
receiver for the firm.
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