Home Hedge Funds Cheetah Fund Investors Lose $9 Million in Alleged Fraudulent Scheme

Cheetah Fund Investors Lose $9 Million in Alleged Fraudulent Scheme

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SEC

The
Securities and Exchange Commission (SEC) has brought charges against Craig
Allen, the Founder and Manager of The Cheetah Fund, an Atlanta-based hedge
fund, for allegedly defrauding investors of millions of dollars.

The
complaint, filed in the United States District Court for the Northern District
of Georgia, has accused Allen of violating multiple securities laws and
regulations.

According
to the SEC’s allegations
, Allen misled investors about the Cheetah Fund’s
performance between January 2019 and January 2023, claiming exceptional returns
while in reality, the fund and a related company, C.M. Allen, incurred
substantial trading losses amounting to over $4.59 million.

The
complaint also stated that Allen falsely claimed the Cheetah Fund employed a
specific accounting firm for auditing and tax purposes.

As the
Cheetah Fund’s compensation structure was performance-based, Allen was only
entitled to receive compensation when the fund generated profits. However, the
SEC has alleged that despite the significant losses and minimal legitimate
earnings, Allen misappropriated at least $2.64 million from the fund and its
investors.

“The SEC
claims that, to date, Allen has returned only about $900,000 to Cheetah Fund
investors, resulting in investor losses of approximately $9 million,” the
regulator said.

The SEC seeks a permanent injunction, disgorgement with prejudgment interest, civil
penalties, and a permanent officer-and-director bar against Allen.
Additionally, the Commission aims to prohibit Allen from participating in the
issuance, purchase, offer, or sale of any security, with the exception of
transactions in his personal accounts.

SEC Maintains a High Level
of Activity

The
Securities and Exchange Commission continues to be one of the most proactive
financial regulators worldwide, consistently making headlines with new cases
and investigations.

Recently,
Uniswap Labs, the company behind the well-known decentralized finance
exchange Uniswap, has found itself in the crosshairs of the SEC. The regulator
is contemplating legal action against Uniswap Labs, although the specific
nature of the potential enforcement remains undisclosed.

In early
April, the SEC took action against Senvest Management LLC for non-compliance
with recordkeeping requirements. The charges, which resulted in penalties
exceeding $6.5 million
, underscore the importance of maintaining accurate and
complete records in the financial industry.

Moving back
to March, Genesis Global Capital, LLC reached a settlement with the SEC,
agreeing to pay a substantial penalty of $21 million. The charges stemmed from
allegations that the crypto lending platform had offered unregistered
securities to the public.

In the
midst of these high-profile cases, the SEC targeted two investment
advisory firms for making false and misleading claims regarding their use of
artificial intelligence in investment
processes
. The companies in question agreed to pay a combined settlement of
$400,000.

The
Securities and Exchange Commission (SEC) has brought charges against Craig
Allen, the Founder and Manager of The Cheetah Fund, an Atlanta-based hedge
fund, for allegedly defrauding investors of millions of dollars.

The
complaint, filed in the United States District Court for the Northern District
of Georgia, has accused Allen of violating multiple securities laws and
regulations.

According
to the SEC’s allegations
, Allen misled investors about the Cheetah Fund’s
performance between January 2019 and January 2023, claiming exceptional returns
while in reality, the fund and a related company, C.M. Allen, incurred
substantial trading losses amounting to over $4.59 million.

The
complaint also stated that Allen falsely claimed the Cheetah Fund employed a
specific accounting firm for auditing and tax purposes.

As the
Cheetah Fund’s compensation structure was performance-based, Allen was only
entitled to receive compensation when the fund generated profits. However, the
SEC has alleged that despite the significant losses and minimal legitimate
earnings, Allen misappropriated at least $2.64 million from the fund and its
investors.

“The SEC
claims that, to date, Allen has returned only about $900,000 to Cheetah Fund
investors, resulting in investor losses of approximately $9 million,” the
regulator said.

The SEC seeks a permanent injunction, disgorgement with prejudgment interest, civil
penalties, and a permanent officer-and-director bar against Allen.
Additionally, the Commission aims to prohibit Allen from participating in the
issuance, purchase, offer, or sale of any security, with the exception of
transactions in his personal accounts.

SEC Maintains a High Level
of Activity

The
Securities and Exchange Commission continues to be one of the most proactive
financial regulators worldwide, consistently making headlines with new cases
and investigations.

Recently,
Uniswap Labs, the company behind the well-known decentralized finance
exchange Uniswap, has found itself in the crosshairs of the SEC. The regulator
is contemplating legal action against Uniswap Labs, although the specific
nature of the potential enforcement remains undisclosed.

In early
April, the SEC took action against Senvest Management LLC for non-compliance
with recordkeeping requirements. The charges, which resulted in penalties
exceeding $6.5 million
, underscore the importance of maintaining accurate and
complete records in the financial industry.

Moving back
to March, Genesis Global Capital, LLC reached a settlement with the SEC,
agreeing to pay a substantial penalty of $21 million. The charges stemmed from
allegations that the crypto lending platform had offered unregistered
securities to the public.

In the
midst of these high-profile cases, the SEC targeted two investment
advisory firms for making false and misleading claims regarding their use of
artificial intelligence in investment
processes
. The companies in question agreed to pay a combined settlement of
$400,000.

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