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Hedge Fund Adviser Under Fire For Faking Algorithmic Currency Trading

btl_functionNew York (HedgeCo.Net) – A North Carolina-based investment adviser and its former owner are being looked at by the SEC after they were accused of misleading an investment fund’s board of directors in order to get approval to manage their fund.

Hedge fund adviser Chariot Advisors LLC. said that they would use algorithmic currency trading as their main strategy, but after launching they instead hired an individual trader who was allowed to use his own discretion on trade selection and execution.

“Chariot Advisors and Elliott L. Shifman misled the fund’s board about the nature, extent, and quality of services that the firm could provide as he touted the competitive benefits of algorithmic trading in two presentations before the board.” The SEC said in a press release yesterday. “Contrary to what Shifman told the directors, Chariot Advisors did not devise or otherwise possess any algorithms capable of engaging in the currency trading that Shifman was describing.”

Other cases highlighting misconduct in the investment contract renewal process include cases against Morgan Stanley Investment Management, a sub-adviser to the Malaysia Fund, and two mutual fund trusts affiliated with the Northern Lights Variable Trust fund complex.

“It is critical that investment advisers provide truthful information to the directors of the registered funds they advise,” said Julie M. Riewe, Co-Chief of SEC Enforcement Division’s Asset Management Unit.  “Both boards and advisers have fiduciary duties that must be fulfilled to ensure that a fund’s investors are not harmed.”

Alex Akesson
Editor for HedgeCo.net
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