[ by Howard Haykin ]

The SEC charged Chicago-based investment adviser Simran Capital Management with lying to the California Public Employers' Retirement System (CalPERS) and other current and potential clients about the amount of money managed by the firm.

Institutional investors such as CalPERS often use assets under management (AUM) as a metric to screen prospective investment advisers soliciting their business. An SEC investigation revealed that while pitching Simran's services, Mesh Tandon falsely certified to CalPERS that his firm satisfied its minimum AUM requirements. After fraudulently obtaining the business from CalPERS, Tandon also falsely inflated Simran's AUM in communications with other potential clients with whom he touted his firm's relationship with CalPERS. Tandon also fraudulently reported an inflated AUM in filings with the SEC, and he later attempted to mislead SEC examiners during a routine examination of Simran.

SEC Findings and Allegations.   Tandon reportedly represented to CalPERS in May 2008 that Simran met explicit AUM requirements and managed at least $200 million as of 12/31/07.  In fact, Simran managed approximately $80 million at that time, and evidence indicates that Tandon was aware that Simran did not meet the CalPERS requirements for AUM.

Tandon then supposedly used Simran's relationship with CalPERS to attract other prospective clients over the next 3-4 years - and he instructed other Simran employees to do the same. All told, Tandon and Simran employees falsely inflated the firm's AUM in communications with employee retirement systems and other prospective clients on more than a dozen occasions.  Tandon and Simran allegedly further overstated the AUM in at least 4 of the firm's Form ADVs filed with the SEC.  

In February 2012, Simran withdrew its SEC registration as an investment adviser and has since ceased operations.

"Tandon deliberately undermined the CalPERS screening process by grossly misrepresenting his firm's purported assets under management." -- Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "To make matters worse, he then used his association with CalPERS to lure other public institutional investors under false pretenses."

Alleged Violations and Settlement Agreement.   The actions Tandon allegedly committed would violate Sections 206(1), 206(2), and 207 of the Investment Advisers Act of 1940. Tandon neither admitted nor denied the findings.

Tandon agreed to be barred from the securities industry and to pay $122K in disgorgement, prejudgment interest and penalties.

SEC's investigation conducted by:    Peter Chan, Jonathan Katz, Andrew O'Brien in the Chicago Reg'l Office - assisted by Chicago Regional Office examiners Susan Weis, Jeson Patel, Max Gillman.

For further details, go to:   [ SEC PR 13-64, 4/18/13 ] and the [ SEC Order ].

Contact the writer at:  Howard@Compliance-Insights.com.