The U.S. Securities and Exchange Commission has filed a complaint in California federal court against an investment advisor from Tweed Financial Services Inc. According to the complaint, the advisor, Robert Russel Tweed, moved money without his clients’ knowledge to a mining project in Ghana and a struggling startup, squandering $1.7 million.
About Tweed Financial Services
In 2008, investment advisor Robert Russel Tweed, then owner of Tweed Financial Services Inc., formed the Athenian Fund LP with $1.7 million raised from 22 investors. The SEC complaint states that Tweed told investors that their money would be invested in PMI Quant Pool 1 LLC, an algorithm-based master fund for stock trading.
According to the complaint, Athenian Fund chose PMI because the algorithm-based fund could lower the volatility of investments. However, Tweed allegedly redirected the funds to Quantitative Analytics Master Fund (QAMF)—a company run by one of his friends—without telling investors.
In 2010, Tweed allegedly learned that $650,000 of his clients’ money was never invested in QAMF stock, but instead used to provide a one-year loan to a mining project in Ghana. When Tweed became aware of the loan, QAMF returned $924,460 of Athenian Fund’s capital to Tweed Financial Services.
The complaint alleges that during this time, Tweed was collecting a monthly management fee based on a percentage of Athenian’s assets and a quarterly payment based on the fund’s performance.
The History of QAMF
According to the SEC, Quantitative Analytics Master Fund was managed by Richardson Performance Management and Investments Co. LLC, both operated by Eric Richardson.
Richardson pleaded guilty in 2012 to felony bank fraud charges and was sentenced to more than a year in prison, followed by supervised release, and ordered to pay civil penalties.
Tweed Financial Services Makes a Second Loan
After recovering $924,460 from QAMF, Tweed Financial Services made another loan of $200,000 to startup Teamwork Retail LLC. The company was run by another friend of Tweed and had filed for bankruptcy in 2013. According to SEC files, less than $2,000 has been recovered from that investment to date.
SEC Seeks Permanent Injunction
While Tweed did not lose the entirety of the $1.7 million, the SEC alleges that the private placement memorandum allowed preferential withdrawal rights to Athenian Funds principals and affiliates.
The complaint also alleges that Tweed only disclosed losses to investors in 2014, after he received a deficiency letter from California state regulators raising concerns over Athenian’s management. According to the SEC, Tweed told investors that he had been working diligently to recover the funds from the Ghana loan since 2012. He did not file a lawsuit to recover the funds invested by QAMF.
Prior to receiving the letter, Tweed gave investors the impression that the fund was thriving by using estimated financial reports based on loan agreements that included interest payments, rather than actual reports based on generally accepted accounting principles.
Did You Lose Money to Tweed Financial Services?
If you believe you have been the victim of stockbroker or brokerage misconduct, you may have certain legal rights that require your immediate attention.
Call an Investment Fraud Attorney Today
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.
With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.
Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.