U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23941 / September 22, 2017
Securities and Exchange Commission v. Moses Investment Company, LLC and Michael S. Moses, No. 17-cv-02296 (D. Colo. filed Sept. 22, 2017)
SEC Charges Colorado Investment Advisory Firm and Its Owner with Lying About Experience and Past Performance
The Securities and Exchange Commission today charged an investment advisory firm and its sole owner and manager with fraud for lying numerous times to investors while raising money for a hedge fund.
The SEC’s complaint alleges that, from approximately November 2013 to April 2014, Moses Investment Company, LLC (MIC), and its principal, Michael S. Moses, raised approximately $1 million for a private fund they managed, WAKE Fund I, LP, by touting Moses’s past experience as a trader or portfolio manager with large private fund advisers, the past investment performance obtained through his investment strategies, the safety of investors’ investments, and Moses’s personal investment in the fund. For example, the SEC alleges that Moses and MIC claimed that Moses was a “Portfolio Manager” in 2007 for a $750 million global macro fund, highlighted Moses’ twenty-four percent trading return achieved during the financial crisis in 2008, and repeatedly represented that the strategy Moses would employ in WAKE Fund was safe and involved limited downside risk. The SEC alleges that, in reality, Moses had very limited fund portfolio management experience, lied about his investment returns, and employed a significantly risky investment strategy that he didn’t disclose to investors, which resulted in the near-total loss of the fund’s assets.
The SEC’s complaint, filed in the U.S. District Court for the District of Colorado, alleges that Moses and MIC violated Section 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC seeks permanent injunctions, disgorgement plus interest, and civil penalties.
The SEC’s investigation was conducted by David A. DeMarco and supervised by Kurt L. Gottschall and Jason J. Burt of the Denver Regional Office. The SEC’s litigation will be led by Gregory A. Kasper and Polly A. Atkinson.