The SEC has charged investment adviser Concord Management and its owner for operating as an unregistered investment adviser for one client, Russian Oligarch Roman Abramovich who, according to news reports may have ties to entities and individuals in Russia that destabilized Ukraine.
According to the SEC’s complaint, Matlin founded Concord in 1999 to provide investment advice for compensation and to supervise and manage the client’s investments in United States-based private funds. The SEC’s complaint alleges that, from at least 2012 through March 2022, Concord and Matlin sourced, arranged, and monitored hundreds of investments, worth billions of dollars, in private equity funds and hedge funds on behalf of the client. According to the SEC’s complaint, both Concord and Matlin were required to register as investment advisers with the Commission based on their activities, but neither did. By failing to register, Matlin and Concord avoided certain legal obligations for investment advisers that protect the investing public, such as various reporting requirements and examination by the SEC. As of January 2022, Concord and Matlin allegedly managed investments for their sole client with an estimated total value of $7.2 billion in 112 different private funds.
According to the complaint, in March 2022, the United Kingdom and the European Union designated Matlin and Concord’s client a sanctioned individual and the client’s assets were subsequently frozen. The SEC’s complaint alleges that, a month prior, in February 2022, Concord and Matlin assisted the client in his attempts to redeem investments and/or sell his securities portfolio. Here is a copy of the Complaint: https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-186.pdf The SEC stated: We allege that Concord flouted the registration requirements of the federal securities laws for over a decade, earning more than $80 million for providing investment advice to its billionaire client during that time,” said Gurbir S. Grewal, Director of the Division of Enforcement. “By failing to register as an investment adviser, Concord not only undermined the Commission’s ability to exercise effective regulatory oversight over billions its client invested in the United States, but also skirted rules crucial to the Commission’s ability to monitor the market for abuse, including rules requiring investment advisers to adopt specific compliance policies and to maintain certain books and records.”
U.S. authorities have charged Russian businessman Roman Abramovich with exporting two planes without a license as required under U.S. sanctions imposed on Moscow in response to its invasion of Ukraine. The United Kigdom sanctioned Abramovich.
The charges made against the investment adviser signals that the SEC, along with the Treasury Department and FINCEN will monitor advisers in the US who engage in dealing with Russian oligarchs and others helping Russia in its war against Ukraine.
JEFFREY NEWMAN IS A WHISTLEBLOWER LAWYER WHO HANDLES CASES UNDER THE SEC, FINCEN AND CFTC WHISTLEBLOWER PROGRAMS AS WELL AS HEALTHCARE FRAUD CASES UNDER THE FALSE CLAIMS ACT. HE CAN BE REACHED AT JEFF@JEFFNEWMANLAW.COM OR AT 617-823-3217