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Regulatory Sanctions

Preferential Treatment by Georgia Adviser to Himself and His Family

October 10, 2019

[Image: Uneven Balance Scale Clipart]

 

by Howard Haykin

 

A federal court issued a ruling against Thomas Conrad, Jr., finding that the Alpharetta, GA, adviser directed preferential redemptions and other disbursements out of a hedge fund and its feeder funds operated by firms he controlled. Conrad was fined $327,500 along with other sanctions.

 

According to the Securities and Exchange Commission (“SEC”), the hedge and feeder funds under his control made disbursements to Conrad, his extended family, and certain favored investors, while representing to other investors that redemptions were suspended.

 

For the record, the Court also ruled, among other things, that Conrad … (i) directed the funds to make undisclosed loans to his family members ; and, (ii) touted his significant experience in the securities industry to prospective investors, but failed to disclose his disciplinary history - which included being barred from the industry by the SEC.

 

 

TAKE AWAY.    It’s often difficult, if not impossible, for investors to know when a dishonest adviser is providing preferential, or unequal, treatment to others at their expense. For protection, it pays to know one’s rights as an investor, and to seek out regulatory authorities for advice whenever they're concerned about being treated improperly. Alternatively, investors should seek out a second opinion from a trusted independent friend or adviser, who might know and advise what options are available to the investor.

 

 

[For further details, click on SEC Litigation Release and SEC Complaint.]