Securities and Exchange Commission acquired an asset frieze against Kinetic Investment Group LLC, Florida-based investment adviser, and Michael Scott Williams, its managing member on suspicion of fraudulent, unregistered securities offering. The offering reached raised approximately $39 million from at least 30 investors located mostly in Florida and Puerto Rico.
The complaint filed with SEC alleges Kinetic Group and Williams raised millions of dollars by making fraudulent material misrepresentations to investors. They solicited them to invest in hedge fund managed by them, Kinetic Funds I LLC. The SEC alleges that significant part of the assets were invested in a startup company, owned by Williams himself. Allegedly, Williams misappropriated at least $6.3 million through undisclosed loans to himself and his entities
Eric I. Bustillo, Director of the SEC’s Miami Regional Office commented:
Kinetic Group’s and Williams’ misrepresentations gave false comfort to investors that their investments would be secure and liquid. As alleged, however, Kinetic Group and Williams diverted a substantial portion of investor capital to Williams’ various business ventures and personal expenses.
On Friday, last week, the US District Court granted the SEC’s request for emergency relief and issued an asset freeze order and records preservation order against Kinetic Group, Williams and number of other companies. Mark Kornfeld was appointed as receiver over Kinetic Group and the relief defendants.
Kinetic Group and Williams are charged with violation of antifraud provisions of the federal securities law. The SEC seeks injunctions, disgorgement of ill-gotten earnings with pre-judgment interest, and financial penalties.
In the end of February the SEC fined Wells Fargo with $35 million over investment recommendation practices.The penalty was imposed for improperly recommending risky investments to some of its clients, including senior citizens and retirees. The company failed to supervise investment advisers and representatives and for lack of adequate compliance policies in place. The advisers directed clients, some with little to no investing experience, into risky investments by encouraging them to buy single-inverse ETFs.
In the beginning of March, the SEC awarded more than $7 million to a whistleblower who provided crucial information and assistance in a SEC action, including the identification of witnesses.So far, the agency has awarded around $394 million to 73 individuals for their help since the first award was issued in 2012.