The Securities and Exchange Commission charged two top officials of an unregistered hedge fund investment advisor with "failure to supervise" charges Monday, marking the first time these types of charges have been filed against individuals working for an unregistered firm.
Marque Millenium Group Inc. Principal Wilfred Meckel was charged with defrauding investors, while Robert T. Littell, director of investments, allegedly failed to properly supervise Meckel while the fraudulent activity took place. Each has already settled the charges with the commission.
Clearly, the SECs goal was to send a message that its antenna is up regarding wrongdoing at the top that causes financial peril for individual investors.
"Whether registered or unregistered, employees of investment advisers and the hedge funds they advise can and will be subject to enforcement action if they fail to act appropriately to protect investors," said Mark K. Schonfeld, associate director of the SECs northeast regional office.
Specifically, according to the SEC, the company gave investors inaccurate information, misrepresented his firms management structure and fully reimbursed two large investors for original investments when they were not deserving of the money. The firm made these preemptive moves because it had been hit with substantial losses, according to the complaint.
Littell can no longer associate with investment advisers and must pay $15,000 in penalties. Meckel was forced to pay $600,000 to investors for money they lost.
The New York Attorney Generals office subpoenaed Millennium at the outset of his announcement of the mutual fund probe ( see MME 9/8/03).