(HedgeCo.Net) The Securities and Exchange Commission has charged Charles Samel, a former consultant for former registered investment adviser International Investment Group LLC (IIG), for his role in an alleged fraud conducted by IIG to cover up tens of millions of dollars in investor losses on bad bets in order to keep its investment advisory business afloat.
As alleged in the SEC’s complaint, Samel assisted IIG’s principals in concealing the fraudulent nature of a loan asset in the fund’s portfolio. The complaint alleges that when auditors asked questions about the prospects that the fake loan would be repaid, Samel helped prepare a sham agreement falsely documenting the sale of the fake loan by the fund. The sham agreement was allegedly provided to the auditors to resolve their concerns about the loan and, as a result, no issues about the loan were raised in the audit report that was sent to the fund investors.
The SEC’s complaint, filed in federal district court in New York, charges Samel with aiding and abetting IIG’s violations of the antifraud provisions of the Investment Advisers Act of 1940. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and a civil penalty.
The SEC charged IIG with securities fraud on Nov. 21, 2019, and revoked IIG’s registration as an investment adviser on Nov. 26, 2019. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws and requires IIG to pay more than $35 million in disgorgement and prejudgment interest. In addition, the SEC charged one of IIG’s principals, David Hu, with fraud on July 17, 2020, and announced settled fraud charges against a senior employee, Carlos Cano, on July 22, 2020.