Home Alts News Tweed Settles SEC Fraud Charges, Accepts Five-Year Banishment

Tweed Settles SEC Fraud Charges, Accepts Five-Year Banishment

The Securities and Exchange Commission has accepted an Offer of Settlement from Robert “Rusty” Tweed in regards to the fraud charges leveled against him and his company, Tweed Financial Services, in 2017.

image_pdf

The Securities and Exchange Commission has accepted an Offer of Settlement from Robert “Rusty” Tweed in regards to the fraud charges leveled against him and his company, Tweed Financial Services, in 2017. As a result, Tweed has been barred from association with any “broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization” for at least five year, after which he may apply for reentry to the appropriate self-regulatory organization or to the SEC itself.

Tweed formed Athenian Fund L.P. to invest in a master fund that would use a quantitative stock trading strategy. The fund purportedly raised more than $1.7 million from 24 investors.

According to the SEC, Tweed and his firm initially invested the money in the stock trading strategy, but later moved the funds into a completely different fund, the Quantitative Analytics Master Fund, which was operated by a business acquaintance of Tweed’s.In October 2010, Tweed learned that approximately 40 percent of the QAMF investment was tied up in a one-year loan to a third party, and when he asked for the money to be refunded, less than half of the funds were returned.

Tweed and his firm then used a portion of the returned capital to invest in a software business run by friend of Tweed’s. Neither investment was profitable and ultimately lost a combined $800,000 in investor capital.

Rather than notify the Athenian Fund investors of the change in investment strategy and the losses on those investments, Tweed allegedly concealed those losses from investors by issuing false and misleading account statements that made the fund appear profitable.

According to the SEC, investors who were able to redeem their interests received more money than they were entitled to because their redemptions were based on inflated asset values. Tweed apparently misled investors for years, and only disclosed the losses after SEC examiners and state regulators uncovered the fraud during routine examinations.

Click here to visit The DI Wire directory sponsor page.