Sunday, 25 September 2016
Last updated 1 day ago
May 21 2010 | 10:00am ET
Ten days ago, brokerage MICG Investment Management went out of business. But it may now have an even bigger problem, as the firm and its CEO have been charged with running a hedge fund fraud.
The Financial Industry Regulatory Authority alleges that the Newport News, Va.-based firm lied to clients and misappropriated money invested in its MICG Venture Strategies hedge fund. The regulator said that MICG and Jeffrey Martinovich, its CEO and manager of the hedge fund, fudged the values of two stocks owned by the fund in order to reap larger fees.
Martinovich also allegedly recruited an elderly investor to pour $75,000 into the fund. The only problem, according to FINRA, is that the investor wasn’t accredited to invest in hedge funds.
Martinovich and MICG have denied FINRA’s allegations.
FINRA is seeking fines and disgorgement of ill-gotten gains.
MICG gave up its broker-dealer licenses and closed its doors on May 12.