{"id":86414,"date":"2023-11-03T01:39:32","date_gmt":"2023-11-03T05:39:32","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=86414"},"modified":"2023-11-03T01:39:32","modified_gmt":"2023-11-03T05:39:32","slug":"president-cco-of-prophecy-asset-management-advisory-firm-charged-with-multi-year-fraud","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/11\/2023\/president-cco-of-prophecy-asset-management-advisory-firm-charged-with-multi-year-fraud.html","title":{"rendered":"President\/CCO of Prophecy Asset Management Advisory Firm Charged with Multi-Year Fraud"},"content":{"rendered":"\n<p>(HedgeCo.Net) The Securities and Exchange Commission has charged <strong>John Hughes,<\/strong> president and chief compliance officer of registered investment adviser <strong>Prophecy Asset Management LP,<\/strong> for his alleged involvement in a multi-year fraud that concealed losses of hundreds of millions of dollars from investors.<\/p>\n\n\n\n<p>Prophecy Asset Management advised multiple hedge funds and reported more than <strong>$500 million<\/strong> in assets under management. The SEC\u2019s complaint alleges that Hughes and his associates at Prophecy Asset Management misled the funds\u2019 investors, auditors, and administrator about the funds\u2019 trading practices, risk, and performance \u2013 all while collecting more than <strong>$15 million in fees.<\/strong><\/p>\n\n\n\n<p>According to the SEC\u2019s complaint, Hughes led investors to believe that their investments were protected from loss, telling them the funds\u2019 capital was shared among dozens of sub-advisers who traded in liquid securities and posted cash collateral to offset any trading losses they incurred. In reality, most of the funds\u2019 capital went to one sub-adviser, who incurred massive trading losses that far exceeded the cash collateral he had contributed. In addition, Hughes caused the funds to invest in highly illiquid investments, which also resulted in substantial losses to the funds. Hughes concealed these losses by fabricating documents and engaging in a series of sham transactions to cover-up the true financial condition of the funds. The complaint also alleges that Hughes deceived investors about the diversification and trading strategies in two other funds. By 2020, after losses in funds that Prophecy Asset Management managed amounted to more than $350 million, Hughes and Prophecy Asset Management indefinitely suspended redemptions by investors.<\/p>\n\n\n\n<p><em><strong>\u201cWe allege that John Hughes committed a brazen and sophisticated fraud that deceived investors to keep Prophecy Asset Management and the funds afloat, despite massive undisclosed trading losses.\u00a0But the collapse was inevitable,\u201d said Nicholas P. Grippo, Regional Director of the SEC\u2019s Philadelphia Regional Office.\u00a0\u201cAs president and CCO, Hughes served in an important gatekeeping role and owed fiduciary duties to his clients.\u00a0As alleged, he did not live up to those duties.\u00a0The SEC will continue to use all the tools at our disposal to root out and expose fraud by investment advisers.\u201d<\/strong><\/em><\/p>\n\n\n\n<p>The SEC\u2019s complaint, filed in U.S. District Court for the District of New Jersey, charges Hughes with violations of the antifraud provisions of the federal securities laws and seeks a permanent injunction, disgorgement of ill-gotten gains plus interest, civil penalties, and an officer and director bar.<\/p>\n\n\n\n<p>In a parallel action, the U.S. Attorney\u2019s Office for the District of New Jersey announced criminal charges against Hughes.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(HedgeCo.Net) The Securities and Exchange Commission has charged John Hughes, president and chief compliance officer of registered investment adviser Prophecy Asset Management LP, for his alleged involvement in a multi-year fraud that concealed losses of hundreds of millions of dollars [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-86414","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86414","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=86414"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86414\/revisions"}],"predecessor-version":[{"id":86415,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86414\/revisions\/86415"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=86414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=86414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=86414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}