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Screenshot of a breaking news alert e-mail from Q2 2017
The Securities and Exchange Commission (SEC) charged a Connecticut-based investment advisory business and its owner with stealing money from investors to settle a private lawsuit among other misuses.
The SEC alleges that Sentinel Growth Fund Management and its founder Mark J. Varacchi misrepresented to investors that money they deposited with the firm would be allocated to up-and-coming hedge fund managers for investment purposes. According to the SEC’s complaint, Varacchi and Sentinel Growth Fund Management did not transfer all the money as promised, instead commingling investor assets and manipulating account activity, account balances, and investment returns as part of a scheme to siphon away investor funds.
Varacchi and his firm allegedly stole at least $3.95 million from investors, including more than $1 million to settle litigation brought by Varacchi’s prior employer.
As alleged in our complaint, Varacchi promised investors that their money would be routed to up-and-coming hedge fund managers when in reality he was diverting significant portions for personal use and unauthorized business expenses,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.
The SEC’s complaint seeks disgorgement and penalties against Varacchi and Sentinel Growth Fund Management. The complaint also names two hedge funds as relief defendants for the purposes of recovering investor assets in their possession.