(HedgeCo.Net) The Securities and Exchange Commission today charged the founder of Platinum Partners and two of its flagship hedge fund advisory firms with conducting a fraudulent scheme to inflate asset values and illicitly move investor money to cover losses and liquidity problems.<\/p>\n
SEC examiners uncovered suspicious activity during an examination of the firms and referred it to SEC enforcement staff for further investigation. The SEC\u2019s complaint filed today in federal court in Brooklyn alleges that Mark Nordlicht and the Platinum funds overstated the value of an oil company that was among their largest assets, and they concealed a growing liquidity crisis by transferring money between the funds, making preferential redemptions to favored investors, and using misrepresentations to attract new investors to the struggling funds during what internal documents described as \u201cHail Mary time.\u201d<\/p>\n
The SEC\u2019s complaint further alleges that Nordlicht schemed with two colleagues and an executive at the Platinum funds\u2019 other major oil investment to divert almost $100 million from that company to help boost the Platinum funds. That company\u2019s noteholders had priority over preferred shares and Platinum\u2019s management and its affiliates were prohibited from participating in any vote among noteholders to change this priority. So Nordlicht and others allegedly rigged the vote by secretly transferring a large block of notes to affiliates, which then cast votes in support of Platinum\u2019s position. The solicitation document falsely stated that Platinum held only a small minority of the notes.<\/p>\n
The SEC\u2019s complaint charges several other individuals in addition to Nordlicht for their roles in the alleged schemes. In a parallel action, the U.S. Attorney\u2019s Office for the Eastern District of New York today announced criminal charges.<\/p>\n
\u201cAs alleged in our complaint, investors were repeatedly presented a false picture of the performance of the Platinum funds and their overall liquidity situation. As investors sought redemptions, the defendants engaged in numerous improper measures in an attempt to meet redemption requests, including taking out high-interest rate loans, commingling monies among funds, and raising money from new investors through fraudulent misrepresentations,\u201d said Andrew J. Ceresney, Director of the SEC\u2019s Division of Enforcement.<\/p>\n
Andrew M. Calamari, Director of the SEC\u2019s New York Regional Office, added, \u201cNordlicht and others allegedly disregarded their fiduciary duties in systematic fashion and made it appear to investors that the funds were much more valuable and liquid than they actually were.\u201d<\/p>\n
Others charged in the SEC’s complaint in addition to Nordlicht, Platinum Management (NY) LLC, and Platinum Credit Management LP:<\/p>\n
David Levy, owner and co-chief investment officer along with Nordlicht.
\nDaniel Small, former managing director and portfolio manager of certain Platinum funds.
\nUri Landesman, former managing general partner of certain Platinum funds.
\nJoseph Mann, who worked in Platinum Management\u2019s investor relations department.
\nJoseph SanFilippo, CFO of a Platinum hedge fund.
\nJeffrey Shulse, CFO of Black Elk Energy, the oil company used in the illicit $100 million scheme.<\/p>\n
The SEC is seeking a court-appointed receiver over funds managed by Platinum Credit Management and other Platinum-related entities. Funds managed by Platinum Management are currently in a liquidation proceeding in the Cayman Islands.<\/p>\n","protected":false},"excerpt":{"rendered":"
(HedgeCo.Net) The Securities and Exchange Commission today charged the founder of Platinum Partners and two of its flagship hedge fund advisory firms with conducting a fraudulent scheme to inflate asset values and illicitly move investor money to cover losses and […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048],"tags":[],"class_list":["post-55734","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/55734","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=55734"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/55734\/revisions"}],"predecessor-version":[{"id":55735,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/55734\/revisions\/55735"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=55734"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=55734"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=55734"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}