Aggregated News From Investment Management Regulators

SEC Obtains Receiver Over Florida Investment Adviser Charged With Fraud

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The Securities and Exchange Commission today announced that it has obtained the appointment of a receiver over Florida-based investment adviser TCA Fund Management Group Corp., its affiliate TCA Global Credit Fund GP Ltd. (TCA-GP), and several funds managed by TCA to protect investors from a fraudulent scheme allegedly conducted by TCA.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida on May 11, 2020, alleges that TCA improperly recognized revenue in order to fraudulently inflate net asset values and performance for several funds it managed, resulting in the funds always reporting positive returns.  TCA allegedly distributed promotional materials to current and prospective investors that included the inflated asset values and false performance results.  According to the complaint, the funds’ reported net asset value of $516 million as of November 2019 was inflated by at least $130 million.  TCA and TCA-GP also allegedly distributed monthly account statements to investors falsely representing monthly returns and investment balances based on the inflated asset values.  The complaint further alleges that the funds paid inflated management fees to TCA and inflated performance fees to TCA-GP.

“As alleged, investors were repeatedly presented a false picture of the TCA funds, showing them to be much more successful than they actually were,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.  “The SEC sought the appointment of a receiver to help locate and preserve the funds’ remaining assets for the benefit of investors.”

The complaint charges TCA and TCA-GP with violating the antifraud provisions of the federal securities laws, and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and financial penalties.  The court yesterday granted the SEC’s request to appoint Jonathan E. Perlman as receiver over the TCA, TCA-GP, and the TCA funds.

The SEC’s investigation, which is ongoing, is being conducted by Shan Chang, Raynette R. Nicoleau, and Allen J. Genaldi under the supervision of Chedly C. Dumornay and Glenn S. Gordon with the assistance of Jose Molina, Victor Mendoza, William Tudor, Roda Johnson, Jeannie M. Cabot, and John C. Mattimore of the Miami Regional Office.  The litigation will be handled by Andrew O. Schiff and Stephanie N. Moot.

Regulator Information

Abbreviation: SEC
Jurisdiction: United States

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