SEC Sues Hedge Fund CCO For Fraud

Oct 3 2008 | 12:53pm ET

The Securities and Exchange Commission has filed suit against David Myatt and William Eichengreen, charging them with fraud involving a now-defunct hedge fund, Directors Performance Fund.

The SEC alleges that Myatt defrauded the fund by convincing Directors Financial Group—the fund's investment adviser and managing member—to invest $25 million in a “prime bank” scheme. Myatt allegedly claimed that he was an associate with American Trade Industries, which purportedly held over $60 million in assets used to “assist the global financial markets and social well-being of others.” ATI's president, Richard Warren, allegedly ran a trading program that transacted in unidentified discounted fixed-income instruments. The ATI Program was promoted to earn a return in excess of 10% per month with no risk to invested principal.

Myatt also said trading for the ATI Program occurred on a secret market overseen by “the Fed” whereby Warren was one of the few traders licensed by “the Fed” to trade on that secret market.

Actually, the ATI Program was a sham and no trades ever took place and no profits were ever generated.

According to the SEC, the fund's chief compliance officer, William Eichengreen, defrauded the fund by falsifying its financial statements allowing the firm to take profit-based fees to which it was not entitled. He also defrauded prospective investors by consistently misrepresenting the fund's trading strategy, investments, and performance.

The SEC seeks an order requiring Eichengreen and Myatt to pay a civil monetary penalty. It has previously sued the firm and its president, Sharon Vaughn, in connection with this matter and settled against Vaughn resulting in the court distributing the fund's assets to investors, ensuring that investors received their principal in full.

Myatt and Warren were previously charged in connection with this matter and Warren was found guilty of 11 wire fraud counts while Myatt pled guilty to an obstruction of justice charge based on his misconduct.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note