SEC RESOLVES FRAUD-BASED LAWSUIT AGAINST CHICAGO-AREA HEDGE FUND ADVISER AND ITS OWNER
The following excerpt is from the SEC website:
“The Securities and Exchange Commission announced today that on November 17 Judge John F. Grady of the U.S. District Court for the Northern District of Illinois entered a final judgment against Jeffrey R. Neufeld (Neufeld) and Paridon Capital Management LLC (Paridon) of Elgin, Illinois for defrauding the TCM Global Strategy Fund (TCM Fund or the fund), a hedge fund, and its investors. Without admitting or denying the Commission’s allegations, Neufeld and Paridon consented to the entry of the final judgment which imposed a $75,000 civil penalty against Neufeld.
Previously, on April 27, 2011, the Court permanently enjoined Neufeld and Paridon from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), 206(3), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Neufeld and Paridon also consented to pay disgorgement and prejudgment interest of $53,182.33 to an injured investor.
According to the Commission’s complaint, Paridon, an investment adviser, and its owner, Neufeld, fraudulently operated the TCM Fund since 2006. Neufeld and Paridon allegedly lied about the fund’s assets under management and reported inflated returns that were not based on actual trading. They also used fictitious returns to lure investors into the TCM Fund. The complaint also alleges that Neufeld and Paridon caused the fund to use a significant portion of its investor money to buy “debt securities” issued by Paridon. Although called debt securities, this investment was in reality a loan from the fund to Paridon. The debt securities were also not permitted investments for the fund, were not disclosed and consented to by the fund, and were improperly marked up by Neufeld and Paridon to offset and hide significant trading losses.”
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