Massachusetts Secretary of the Commonwealth William Galvin charged Cantella Securities of Boston Wednesday with improperly selling a hedge fund to non-accredited investors, who each lost about $100,000 apiece. Registered reps James Pangione and Timothy Rassias were charged with the improper sales, as well as wiping out 90% of the assets in two hedge funds by investing the money in tech.

Approximately 41 clients invested a total of $3.5 million in the two funds, the Hercules Hedgehog Fund and the Agrippa Fund, according to the regulator. More than half of these investors were "unsophisticated, non-accredited investors," according to the complaint.

Pangione testified that Cantella asked prime broker BankAmerica Securities to sign a waiver to assume risk in the funds. He also said that no one at Cantella supervised their sales of the hedge funds.

"Allowing, even encouraging, agents to offer unregistered and high-risk hedge funds to unsophisticated investors will not be tolerated," Galvin said in a statement. Two months ago, he set a record in the non-regulated world of hedge funds by suing two brokers for advertising hedge funds to non-accredited investors.

A Cantella spokesman declined comment to Reuters, which was unable to reach either Pangione or Rassias.

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