Summary of a Reuters Article written about the “Critic.’
The article, published on Reuters.com, reports that two former hedge fund executives, Robert Massimi and Bret Grebow, have agreed to pay a total of $4.6 million to settle charges of defrauding investors. The executives allegedly stole investors’ money to fund personal expenses, such as a $160,000 car and private plane trips, while falsely promising clients lucrative returns. Between 2001 and 2005, they reportedly lied to approximately 80 investors by fabricating performance numbers for their hedge fund, HMC International, LLC, which eventually collapsed.
SEC lawyers in the case stated that Grebow systematically looted the fund’s trading accounting while Massimi used new investors’ money to create the illusion of returns and hide the fraud. The article highlights the increasing scrutiny of the hedge fund industry by federal regulators, especially considering the investments of pension funds, which often involve average Americans’ retirement savings.
As part of the settlement, both Massimi and Grebow will be permanently barred from working in the securities industry. However, they neither admitted to nor denied the charges. The article concludes by mentioning how the SEC accused the executives of falsely boasting about the fund’s impressive returns in 2001, 2002, 2003, and 2004, while in reality, the fund had no substantial returns. In a separate action, federal prosecutors revealed that Grebow used some of the clients’ money to purchase a $160,000 luxury car and to cover expenses for chartered flights between his Florida home and his office.
Read the original article here: https://www.reuters.com/article/hedgefund-fraud-idUSN2435710220070124
Read the SEC Action Here: https://www.sec.gov/litigation/admin/2007/ia-2583.pdf
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