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Hedge Fund Adviser Inflated Fund Performance, but Even Firms in Compliance Need to Be Cautious

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The SEC recently announced charges against an investment adviser, Premium Point Investments LP, and accused the adviser of engaging in intentional fraud - you can read the SEC's litigation release and find its Complaint containing the charges here. The SEC alleges that the fund's manager and a number of employees and partners colluded to inflate the value of funds beyond their true value, all in order to exaggerate returns, retain investors and hide poor fund performance. This alleged activity went beyond mere negligence. The SEC claims that three of the named defendants, the adviser's CEO/ Chief Investment Officer, Portfolio Manager and a former Partner, worked out a secret arrangement with a broker-dealer whereby the broker-dealer gave inflated quotes for mortgage-backed securities - in return, the defendants at Premium Point sent trades to the broker-dealer.

Even If You Think Your firm is Compliant, Review With an Outside Regulatory Counsel Can Help

It's much more common to see firms that are negligent and do not pay proper attention to their compliance programs than firms that engage in outright fraud. Even given the high risks of neglecting compliance, we see plenty of advisers that only review compliance matters once a year (or less often), and to only really look closely when an SEC examination is looming. While it's important to be proactive and prepare for an SEC exam, and certainly there's no better time than before the SEC notifies an adviser of an upcoming inspection to ensure your compliance policies and procedures are where they should be, firms can take steps now ensure proper policies and procedures are in place and being followed. That's why we recommend working with an outside regulatory counsel, even when you believe your policies and procedures are adequate. Often, we will find omissions and/or problems when reviewing policies and procedures for the first time, and are able to recommend proactive steps designed to enhance compliance efforts before your next exam.

Learn More About Private Equity and Hedge Fund Counsel

From registering with the SEC, performing due diligence, developing marketing collateral, testing compliance programs and guiding you through an SEC examination, contact Jacko Law Group can help your private equity or hedge fund manage any potential compliance issue well before it becomes a problem for the firm.

About the author

Jacko Law Group provides tailored legal services and effective strategies for success, delivering exemplary solutions to complex legal and regulatory challenges to ensure that both business efforts and compliance obligations are satisfied.

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Alan Markfeld
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Dharmi is an excellent securities lawyer who understands the law as it pertains to these cases. She is extremely proactive and represents her clients well. I highly recommend Jacko and Dharmi.
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Danielle Martin
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I’ve had the privilege of working closely with this firm in my role as Chief Compliance Officer and I can confidently say they are an exceptional compliance partner. Their depth of experience is immediately evidentand they bring a level of practical knowledge. What I truly enjoy is their ability to translate complex regulatory requirements into plain English, often using real, everyday examples that make implementation far more manageable. They are also incredibly responsive and reliable. In a field where timing matters, their prompt communication and thoughtful guidance have been invaluable. If you’re looking for a compliance attorney who combines expertise, clarity, and professionalism, I highly recommend them.
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Michelle and the team at Jacko Law Group have helped guide through a variety of critical circumstances as we ventured through the uncharted and unfamiliar territory of becoming and successfully operating as an RIA. I have particularly appreciated Michelle's personal involvement and genuine caring about us and our organization. She has been responsive and her counsel has been consistently on-point and helpful. She artfully guided us through our initial filing process and first SEC exam process - which went very well. Very grateful to Michelle and her team.
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Michelle and her team were excellent to work with, front to back. They helped me to understand the challenges ahead and were always proactive in their consultation through every step of my transition. JLG truly know the wealth management industry very well and did a great job of understanding the challenges unique to my business. Without them, I can confidently say I would not have felt as comfortable through the transition as I did. Fortunately, that's not something that stops there - Michelle and her team have kept in touch to ensure that I'm on top of certain administrative issues, trends, and simply showing me that they care about my business and success. I look forward to continuing to work with them for many years to come.
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Dharmi Mehta was extremely helpful when my business partner and I transitioned to a new RIA firm. She and her staff were all very professional. Her guidance during our transition was invaluable. I highly recommend Dharmi and Jacko Law Group.
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Joseph Burwell
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Dharmi and Amandeep were a delight to work with. They assisted me with a claim and stuck with me the entire way through. Dharmi's advice was invaluable, and I was most impressed by her clear and professional communication. From beginning-to-end, both Dharmi and Amandeep kept me well informed. Their entire team are proud of their work and rightfully so. Thank you!
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Faruk Jaffer
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My mentor once told me that a good attorney is worth their weight in gold — and that couldn't be more true of Michelle and Amanda. Their expertise, professionalism, and responsiveness were top notch every step of the way. It's rare to find legal partners who are not only sharp and thorough, but also genuinely invested in your success. I’m grateful for their guidance and highly recommend them to anyone seeking trusted legal counsel.
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everistus etafo
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It is my great Privilege to share my Review of what Atty Dharmi Mehta of Jacko Law Group did for me and by extension for my family. From the first time complimentary conversation we had having spoken to several other Lawyers ,l knew she was the right person for the Job .Because of her background as a former RR ,she was professional,kind, Empathetic,listened and was focused on fighting for me. From a potential of been terminated with cause ,l was able to walk away with a clean U5 with a validation that l did nothing wrong except what was in the best Interest of my clients. I hope nobody ever has to go through what l have Experienced, but if you do ,you want Dharmi Mehta beside you .Rest assured your service Deserve 10 stars but this forum only allows 5. Me and my family are forever grateful and will make sure that any RR who needs an advocate will know about you . Everistus Etafo
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Karen Althaus
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I have worked with Jacko Law Group for 2 different business situations that necessitated an attorney. In both cases, the team was very thorough & competent. Their attention to our situation and the extra effort they put into our case(s) was very much appreciated. I would highly recommend Jacko Law Group!