Friday, 30 January 2015
Last updated 5 hours ago
Dec 19 2012 | 11:27am ET
Aladdin Capital Management and its former CFO have settled allegations that they lied to investors about its own investments in a structured credit program.
Aladdin agreed to pay $1.6 million to settle the Securities and Exchange Commission charges, while former CFO Joseph Schlim agreed to pay $50,000. Neither admitted or denied any wrongdoing.
But, according to the SEC, wrongdoing there was: Aladdin allegedly told investors in its Multiple Asset Securities Tranche advisory program that it, too, was investing in the collateralized debt and loan obligations. One marketing document said, "Aladdin co-invests alongside MAST investors in every program. Putting meaningful 'skin in the game' as we do means our financial interests are aligned with those of our MAST investors."
Aladdin actually had no such skin in the game, making no investments in CDOs in which MAST invested.
"If you sell an investment with the pitch that you are co-investing and have 'skin in the game,' then you better actually have 'skin in the game,'" SEC enforcement chief Robert Khuzami said. "Such a representation by an investment adviser or broker-dealer is an important consideration to investors in complex products."
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…