Hedge Fund Manager Lonny Bernath Charged with Fraud

SEC Stop OrderOn October 13, 2015, the Securities and Exchange Commission (SEC) charged a hedge fund manager from Charlotte, Lonny Bernath, with defrauding investors in three hedge funds over several years.

The SEC filed a complaint stating that between at least 2007 and 2011, Bernath instructed three funds that were managed by his investment advisory firm to make loans to and investments in illiquid real estate and business ventures which he also oversaw and had personally invested in. The complaint also states that Bernath gave a false account to the Funds’ investors regarding these investment activities and did not disclose them until 2013. Also included in the SEC’s complaint is that from 2008 to 2011, Bernath regularly kept record of the value of these investments and loans, to the detriment of the Funds’ investors.

Bernath has agreed to partially settle the case against him, without admitting or denying the allegations. The settlement is pending final approval by the court. Bernath agreed to the entry of a final judgment ordering an accounting and permanently enjoining him from future violations of Sections 206(1), 206(2), and 206(4) and Rule 206(4)-8 thereunder of the Investment Advisers Act of 1940; Section 10(b) and Rule 10b-5 thereunder of the Securities Exchange Act of 1934; and Section 17(a) of the Securities Act of 1933. At a later date, the suitable amount of disgorgement and civil penalty, if any, will be decided on by the Court upon motion by the SEC.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
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