(HedgeCo.Net) The Securities and Exchange Commission has charged New Jersey resident and unregistered investment adviser, Mark Marchi, with defrauding investors in his fund Precipio Capital, LLC.
According to the SEC’s complaint, between February 2016 and September 2020, Marchi solicited over $2.8 million of investments in Precipio from at least 22 investors by falsely telling them he was profitably trading securities in Precipio’s accounts. In order to conceal his fraud, Marchi allegedly falsified investment documentation, including entering thousands of fake trades into an electronic portal accessed by investors. The complaint alleges that Marchi misappropriated investor funds by secretly paying over $1.4 million in Ponzi-like disbursements to earlier-in-time investors and by diverting cash from Precipio’s bank accounts to his own bank accounts. As alleged in the complaint, Marchi is a recidivist who pleaded guilty in 1998 to felony charges of conspiracy to violate the federal securities laws, was barred by the New York Stock Exchange in 1999, and was subject to an Administrative Consent Order imposed by the New Jersey Bureau of Securities in 2015.
The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Marchi with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder. Without admitting or denying the complaint’s allegations, Marchi has consented to the entry of a judgment that enjoins him from violating the charged provisions, imposes an officer-and-director bar, and prohibits him from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any security, with the exception of purchasing or selling securities for his own personal account. The judgment also provides for the court to order, upon motion of the Commission, disgorgement with prejudgment interest and/or a penalty against Marchi, if deemed appropriate. The proposed settlement is subject to court approval.
In a parallel action concerning the same conduct, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Marchi.
