Monday, 2 March 2015
Last updated 2 hours ago
Feb 11 2009 | 2:47am ET
Finvest Asset Management may not be “blowing up,” but it may well be going up the river.
The multi-strategy hedge fund shop and founder Grant “Gad” Grieve have been charged with using phony auditors and creating phony financial statements. According to the complaint, filed by the Securities and Exchange Commission in New York federal court yesterday, Finvest, Finvest Fund Management and Grieve used a pair of “sham” firms to “audit” its books and lured investors by lying about their funds’ returns.
The SEC’s move comes as Grieve has refocused Finvest’s attention on Europe with a new fundraising push and new offices in London and Zurich, Switzerland. He has raised more than $11 million in the U.S. since 2004, and last year began soliciting European investors with “newly fabricated, fraudulent documents,” the lawsuit alleges.
In August, FINalternatives reported that Finvest had been unable to reconcile its payments to investors in its managed accounts and that the firm’s employees were either working for home or looking for new jobs. Grieve called those reports “malicious and untrue,” saying a power failure at its office was the reason so many employees were working from home.
“There are absolutely no issues that we have with any of our investors,” he said at the time.
Finvest manages two funds, founded in 2001 and 2007. According to the SEC, he showed a European institutional investor a brokerage statement for the first vehicle, the Primer Fund, showing $118 million in a trading account. In fact, the regulator said, the account had a negative balance of $65.
The SEC also charges that he gave investors a phony audit report from a phony auditing firm. The alleged “auditor,” Jersey City, N.J.-based Kass Roland, is not registered with the Garden State or with the Public Company Accounting Oversight Board, and its phone numbers and Internet domain name are listed to accounts in Grieve’s name.
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…