SEC Halts Fraudulent Hedge Fund Offering By Florida Investment Advisor
If you’ve been the victim of a fraudulent or unregistered securities offering, you may have legal recourse.
The Securities and Exchange Commission recently charged Kinetic Investment Group LLC and its managing member, Michael Scott Williams, in connection with an alleged fraudulent, unregistered securities offering that raised approximately $39 million from at least 30 investors located mostly in Florida and Puerto Rico. The SEC also obtained an asset freeze and other emergency relief against Kinetic Group and Williams.
According to the SEC’s Complaint, Kinetic Group and Williams raised millions of dollars by making material misrepresentations to investors who they solicited to invest in Kinetic Funds I LLC, a purported hedge fund that they managed.
The defendants represented to investors that Kinetic Funds’ largest sub-fund (KFYield) invested solely in U.S.-listed financial products and that at least 90% of its portfolio was hedged using listed options, the Complaint stated. Defendants also touted KFYield as a liquid investment, the SEC said.
In reality, according to the SEC, Williams invested a significant part of the sub-fund’s assets in a private start-up company that he owned. Williams also allegedly misappropriated at least $6.3 million of Kinetic Funds’ assets to fund other business ventures and to pay for personal expenses.
“Kinetic Group’s and Williams’ misrepresentations gave false comfort to investors that their investments would be secure and liquid,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “As alleged, however, Kinetic Group and Williams diverted a substantial portion of investor capital to Williams’ various business ventures and personal expenses.”
If you participated in Kinetic Group’s offering, you should contact an experienced securities attorney.
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