New York (HedgeCo.net) – The SEC has charged two investment advisers with securities fraud for 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 Arthur G. Nadel.
The SEC alleges that Sarasota, Fla.-based 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.
According to the SEC’s complaint, hedge funds Valhalla Investment Partners L.P., Viking IRA Fund LLC, and Viking Fund were controlled by Nadel with no meaningful supervision or oversight by the Moodys. The SEC charged Nadel with fraud last year and obtained an emergency court order to freeze his assets.
“The Moodys led investors to believe that they were faithfully managing funds invested with them,” said Glenn S. Gordon, Associate Director of the SEC’s Miami Regional Office. “Instead, they abdicated their responsibilities to investors and ignored warning signs that should have alerted them to the fraud that was occurring all around them.”
Mr. Moody’s attorney, Jeffrey L. Cox, of Sallah & Cox, LLP. stated “The SEC’s complaint does not allege that Chris Moody knowingly intended to harm investors. The complaint alleges recklessness which Mr. Moody neither admits nor denies. Mr. Moody has cooperated from the outset with the receiver in the recovery of assets and will continue to do so.”
In its complaint against the Moodys, the SEC seeks permanent injunctions, financial penalties, and disgorgement of illegal gains. Without admitting or denying the SEC’s allegations, the Moodys have consented to permanent injunctions against future securities fraud violations and are bared from associating with any investment adviser for five years.
Editing by Alex Akesson
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