US federal regulators charged a New York-based investment advisory firm and two co-owners with misleading clients into investing in a risky hedge fund.
The Securities and Exchange Commission (SEC) accused that Timothy Dembski and Walter Grenda of Reliance Financial Advisors misled clients who were retired or nearing retirement and living on fixed incomes to invest in a fund managed by Scott Stephan. (http://1.usa.gov/1vQo4Xg) Stephan, who managed Prestige Wealth Management Fund, had"virtually no investing experience," the SEC said. He has agreed to settle similar charges leveled against him.
Dembski's and Grenda's clients invested about US$12 million (S$15.7 million) in Prestige Wealth. The advisers are accused of telling clients that the fund used a sought-after trading algorithm to invest.
The algorithm did not work and the fund collapsed within two years since starting trading in April 2011, wiping out the vast majority of its investments.