Quant Hedge Fund Start-Up Has Assets Frozen

New York (HedgeCo.net) – The SEC has accused Belal K. Faruki and Neural Markets LLC., and relief defendants Evolution Quantitative 1X Fund and Evolution Quantitative 1X LLC., of misrepresenting their startup hedge fund. A federal judge has frozen all the manager’s hedge fund assets, according to Courthouse news srevices.

The Wall Street Journal reported that Faruki has denied the allegations. He said the entire complaint is a smear campaign by a former partner.

“It’s working. He definitely ruined our lives,” he said. “And the government is his free lawyer right now.”

The Chicago Sun Times reports that Faruki said he is a mathematician who designed his own investment strategies software. As principal owner of Neural Markets, he and five friends decided to use the software to invest in the market. It was a private company that did not want outside investors, Faruki said.

“We don’t take public money. We don’t advertise ourselves to the public.” Faruki said. “The SEC is allowing taxpayers’ dollars to be blown on a frivolous lawsuit.”

The SEC alleges that Faruki and Neural Markets presented themselves a a start-up quantitative hedge fund, defrauding at least one investor out of  $1 million. The hedge fund is alleged to have falsely represented to the Investor that trading was generating profits for the Evolution IX Fund, when in fact losses were being incurred, the federal complaint stated.

Faruki said the reason no other victims are mentioned in the SEC complaint is that there aren’t any. According to Faruki, it is simply one disgruntled partner who could not get a criminal complaint filed so he turned to the SEC, the Chicago newspaper reported.

Alex Akesson
Editor for HedgeCo.net
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