The Securities and Exchange Commission (SEC) has charged hedge fund advisory firm Weston Capital Asset Management LLC (Weston Capital), of West Palm Beach, FL, and its founder and president, Albert Hallac, for allegedly shifting money from one investment to another without informing investors and investing contrary to the hedge fund’s stated investment strategy. The SEC complaint states that Albert Hallac, with the assistance of Weston Capital’s former general counsel Keith Wellner, allegedly drained over $17 million from a hedge fund they managed, Wimbledon Fund SPC Class TT Segregated Portfolio (TT Portfolio) and transferred the funds to Swartz IP Services Group, Inc. (Swartz IP), a consulting and investment firm.
According to the SEC’s complaint, Weston Capital’s TT Portfolio was required to invest all of the investor monies in a diversified hedge fund, Tewksbury Investment Fund Ltd. Weston Capital allegedly went against its stated investment strategy by transferring funds to Swartz IP and failed to disclose this to investors, who allegedly received false account statements portraying their investment as performing as well or even better than before. The SEC complaint states that Albert Hallac, Keith Wellner, and Mr. Hallac’s son allegedly collectively received $750,000 in payments from Swartz IP. The complaint further states that Weston Capital and Albert Hallac allegedly wrongfully used $3.5 million to pay down a loan from another firm-managed fund.
“Investment advisors owe their clients a fiduciary duty of utmost good faith and full disclosure about what they’re doing with their money,” said Eric Bustillo, director of the SEC’s Miami Regional Office. “Weston and Hallac dishonored that duty with Wellner’s assistance by secretly steering investor proceeds to a third party and then pocketing some of those funds.”
Without admitting to or denying the SEC’s allegations, Weston Capital, Mr. Hallac and Mr. Wellner have agreed to settle the SEC’s charges. The court will determine monetary sanctions at a later date. In the meantime, Keith Wellner and Jeffrey Hallac have agreed to pay $120,000 in disgorgement.
Financial advisors and other financial professionals have a fiduciary duty to make suitable investment recommendations and to help minimize an investor’s risk of losses. Investors look to their financial professionals for advice about how to reach their goals and trust those professionals to make the right recommendations and to act within the confines of industry rules and regulations. When brokers or advisors fail to meet the standard of care and investors lose money, an action for negligence or breach of fiduciary duty may be appropriate.
Have you suffered losses in your investment account due to any financial advisor’s unlawful misconduct and/or breach of fiduciary duty? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against financial professionals for unsuitable recommendations, and/or other unauthorized and fraudulent misconduct.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.