The Securities and Exchange Commission has charged Nevis Capital Management, its president, David R. Wilmerding III, and executive vice president, John C. Baker, with inequitably allocating shares of initial public offerings to only two of the firms 105 clients. The firm only allocated IPOs to the Nevis Fund and Snowden Limited Partnership, although it falsely stated in SEC filings that it would treat all of its clients equally, the SEC said.
Regulators further charged that the Nevis Funds exceptional cumulative returns of 90.1%, 154.6% and 286.5% as of May 31, 1999, Sept. 30, 1999 and Dec. 31, 1999 would actually have been negative 5%, negative 3.6% and 41% without its IPO holdings. These padded returns netted Nevis Capital $2.6 million in fees, the SEC said. Nonetheless, the firm misrepresented the reason for the funds returns as its "long-term investment strategy" in its prospectus and advertisements, rather than its IPO holdings, the SEC said.
The SEC plans to hold a hearing to determine whether these allegations are true.