Acamar Global Investments, LLC, a formerly SEC-registered investment adviser, and its principal, Rudolph A. Martin, were the subject of an SEC enforcement action for allegedly making material misstatements about:
* the firm’s assets under management, * the past performance of its proprietary investment models, and * the strategy and amount of investor subscriptions for a hedge fund Acamar managed.
The SEC found that from October 2011, until the firm de-registered in May 2014, Acamar’s Forms ADV falsely claimed that it managed assets in excess of $180 million in order to qualify for SEC registration. In fact, during the relevant time period, Acamar managed less than $200,000, all of which was managed on behalf of only one client – an individual client with a separately managed account. In addition to that client, Acamar advised three additional clients: the Acamar Global Growth Master Fund, an offshore fund, and its two feeder funds, an onshore fund and and an offshore fund. The SEC found that Acamar’s website and promotional materials included misleading reports that purported to detail the past performance of investment models that Acamar used in managing assets for its advisory clients. The reports also failed to disclose that the performance data were hypothetical and were not based on actual trading. In addition, the SEC stated that the reports directed readers to visit the Morningstar website “for information current to the most recent month-end.” In fact, the SEC found that the performance data contained in the reports were hypothetical and were not based on actual trading, which was not disclosed anywhere in the report. Moreover, Morningstar’s website had no information regarding the hypothetical value of the model portfolio, contrary to the representations in the reports.
Lastly, the SEC stated that Acamar failed to adopt and implement an adequate compliance program. Acamar’s written policies and procedures were not reasonably designed to prevent violations of the Advisers Act. Acamar had no written policies and procedures concerning advertising, performance calculation, portfolio management, conducting an annual review, or Form ADV disclosures.
Click http://www.sec.gov/litigation/admin/2015/ia-4050.pdf to access the enforcement action.