SEC Charges Former Stockbroker Peter Kohli with Fraud and Orders an Asset Freeze
On September 28, 2016 the Securities and Exchange Commission (“SEC”) announced charges and an emergency asset freeze against former stockbroker Peter Kohli for defrauding investors in his failing mutual fund business.
The SEC’s complaint, filed in federal court in Philadelphia, Pennsylvania, alleges that, from 2012 through 2015, Kohli fraudulently raised more than $3.2 million from at least 120 investors. The complaint alleges that, among other things, Kohli filed false mutual fund registration statements with the SEC, misappropriated investor funds, and made false and misleading statements when selling securities in a company controlled by Kohli. At the time of his misconduct, Kohli was a registered representative and investment adviser representative associated with a dually-registered broker-dealer and investment adviser.
According to the SEC’s complaint, in 2012, Kohli launched DMS Funds, which ultimately consisted of four emerging market mutual fund series. DMS Advisors, Inc. was DMS Funds’ investment adviser, and a separate Kohli-controlled company (Marshad) owned DMS Advisors. The complaint alleges that Kohli filed registration statements with the SEC that falsely overstated DMS Funds’ sophistication and ignored the key risk that DMS Advisors and Kohli would be unable to pay the funds’ expenses, sold Marshad warrants, falsely telling investors that Marshad had taken steps toward an initial public offering, stole money meant to be invested in the mutual funds, and used it instead to pay fund expenses and, as the funds neared collapse, lied to investors and sold Marshad promissory notes with no reasonable expectation that the purchasers could be repaid.
The SEC’s complaint charges Kohli with violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1), 206(2), 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and Section 34(b) of the Investment Company Act of 1940. The complaint charges DMS Advisors with violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), 206(4) of the Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also charges Marshad with violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint also names DMS Funds as a relief defendant for the purpose of recovering investor funds in its accounts. The SEC seeks preliminary and permanent injunctions, disgorgement plus prejudgment interest, and financial penalties.
Judge Schmehl for the U.S. District Court for the Eastern District of Pennsylvania granted the SEC’s request for a temporary restraining order and asset freeze against Kohli, DMS Advisors, Marshad, and DMS Funds. A court hearing has been scheduled for October 7, 2016, on the SEC’s motion for a preliminary injunction.
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 firstname.lastname@example.org 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.
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