Brokerage Charged With Aiding Hedge Fund Fraud

Aug 13 2014 | 10:42am ET

A Bahamian brokerage firm stands accused of helping a Bernard Madoff feeder fund manager hide losses from investors.

The Securities and Exchange Commission has sued Alliance Investment Management and its president, Julian Brown, alleging that they assured Nikolai Battoo’s investors that Alliance served as custodian for Battoo’s hedge funds, when they in fact did not have custody of most of the assets. They also allegedly allowed him to create phony account statements on Alliance letterhead overstating assets by more than $150 million, and allowed Battoo to misappropriate $45 million in investor capital—$5 million of which allegedly went to Alliance and Brown.

“We allege that Brown and his firm enabled Battoo’s scheme by providing investors with false assurances about who was holding their money and how much money they had in their accounts,” Timothy Warren of the SEC’s Chicago office said.

The Alliance suit comes nearly two years after the SEC and Commodity Futures Trading Commission sued Battoo for hiding losses—including those suffered in the Madoff Ponzi scheme—from investors. The regulators said Battoo then used the collapse of MF Global Holdings as an excuse to stop paying out redemptions.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of