May 31, 2016

The SEC charged Nashville-based investment advisory firm Hope Advisers, Inc. and its owner, Karen Bruton, with scheming to collect extra fees from a pair of hedge funds they managed.  The SEC alleges that Hope Advisers and Bruton orchestrated certain trades to cause the funds to realize large gains near the end of the month, while basically guaranteeing a large loss to be realized the following month, in order to circumvent the funds’ fee structure under which Hope Advisers was entitled to fees only if the funds’ profits in the month exceeded past losses.  Without the fraudulent trades, Hope Advisers would have received almost no incentive fees since October 2014.  Hope Advisers and Bruton have consented to an interim order that restricts them from accessing $7 million of their own investments in the funds.  SEC

Tagged in: Financial and Investment Fraud,