Securities News: Alternative Fund Manager Accused of Misleading Investors, Futures Trader Goes to Jail for Fraud, Ex-NBA Player Gets Sentence for Ponzi Scam, and 9th Circuit Upholds Investment Manager’s Conviction

Equinox Fund Management Resolves SEC Charges For Over $5.8M
A Denver-based alternative fund manager has consented to settle Securities and Exchange Commission charges accusing it of misleading investors about the way certain assets were valued and for overcharging management fees. According to the regulator, Equinox Fund Management LLC determined its management fees differently from the method it described in registration statements for The Frontier Fund, which is a managed futures fund.

Although registration statements said that management fees would be calculated based on each series’ net asset value, Equinox used the assets’ national trading value instead. Also, the firm is accused of straying from the valuation methodology it had disclosed for certain holdings.

The fund manager will pay back investors about $5.4M in excessive management fees that it was paid over seven years, in addition to $600K in prejudgment interest. It also will pay a $400K penalty.

Futures Trader Goes to Jail, Pays Restitution for Securities Fraud
RXM Holdings Ltd. futures trading director Robert Scott Wiens is sentenced to one year in prison after pleading guilty to securities fraud He also will pay $260k in restitution to investors he harmed.

Wiens was an unlicensed securities professional in 2010 and 2011. He sold fraudulent investments, which he traded on the futures market.

Wiens directed investors to open bank accounts under RXM’s name for their funds. He told them that there was zero risk and returns were guaranteed. He then used the money in the accounts to pay off earlier investments and cover his own spending.

NBA’s Tate George Gets Nine Years in Prison
Tate George, the former NBA player, has been sentenced to nine years behind bars for the fraud he committed that involved a $2M Ponzi scam. George has been behind bars since he was convicted in 2013 on four counts of wire fraud.

According to prosecutors, George convinced NBA players and others to invest money in his company, which was supposed to buy and develop real estate projects. He used these funds to pay off earlier investors and his personal expenses. Through the Ponzi Scam, he made money from 2005 through early 2011 even though The George Group, his supposed real estate development firm, wasn’t profitable. Yet according to prosecutors, George claimed that the firm had over $500M in assets under management. He promised investors that they’d get their money back plus interest.

George played professional basketball with the Milwaukee Bucks and the New Jersey Nets.

Ninth Circuit Says Seattle Investment Manager’s Fraud Conviction Stands
The United States Court of Appeals for the Ninth Circuit has upheld investment manager Mark Spangler’s criminal conviction on 32 counts related to a $46M financial fraud. Spangler funneled millions of dollars from typical investment accounts into investments involving high-risk start-ups in which he had ownership stakes.

According to prosecutors, Spangler did not tell investors that their cash was going into volatile investments. They say that he said he would invest their money into bonds and publicly traded companies.

In 2012, a grand jury indicted Spangler. For his conviction he was sentenced to 19 years in prison.

Spangler had sought to convince the court that a jury had convicted him because of unfair testimony in which he was called a fiduciary. However, the Ninth Circuit said that the jury was told not to factor in the matter of fiduciary duty when deciding whether to convict him.

Read the SEC Order in the Equinox case, SEC, January 19, 2016

Futures trader pays $260,000 in restitution for securities fraud, The Denver Post, January 19, 2016

Former NBA player Tate George gets nine years in prison for Ponzi scheme, New York Daily News, AP, January 21, 2016

9th Circ. Upholds Financial Adviser’s $46M Fraud Conviction, Law360, January 15, 2016

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