Another Reason to Investigate Your Investment Adviser
Boston Provident LP manages $130 million. A New York-based registered investment adviser, it is the adviser to three investment pools which likely contain the nest eggs of hundreds of investors. It may get a sudden rush of requests for redemptions given the SEC’s recent enforcement case against its Chief Financial Officer, Ezra C. Levy.
According to the complaint filed in U.S. District Court for the Southern District of New York, Levy executed a fraudulent scheme to benefit himself at the expense of Boston Provident and its clients, by deliberately arranging secret sales of securities from his personal trading account to Boston Provident’s accounts at inflated prices. Specifically, on two days in June 2009, Levy secretly entered “sell” orders for securities at above-market prices for his personal account and, at approximately the same time, entered “buy” orders for the same securities, at the same above-market prices, for Boston Provident’s accounts. By placing these matched orders, Levy caused sales of securities from his personal account to Boston Provident’s accounts at inflated prices. Levy’s profit from these fraudulent trades exceeded $537,000.
From my days at the SEC, to my work as a court-appointed receiver in SEC fraud cases, to my work as the head of an investor protection company, I have seen all kinds of fraudulent conduct by brokers and investment advisers, but this is the first time I have come across allegations quite like this. It is a reminder that the only limit on the shape of a fraud is the imagination of the fraudster.
If you want to protect what it took you so long to save, do what banks do when they move cash: hire private protection. Law enforcement is good at what it does, but what it does is bring to justice those who have already committed crimes. Your goal is to avoid ever having to talk to law enforcement about how you have been victimized.
