SEC Halts Misappropriation and Fraudulent Securities Offering
On April 23, 2019, the SEC obtained an emergency asset freeze and temporary restraining order to halt an ongoing fraudulent securities offering by Eric Lyons, a Massachusetts resident, in an attempt to conceal his misappropriation from certain hedge funds Eric Lyons advised through his Massachusetts-based investment advisory businesses.
According to the SEC’s complaint, from mid-2017 to the present, Eric Lyons and various investment adviser entities with the name Synchrony that Eric Lyons controlled engaged in a scheme to misappropriate assets from hedge funds Eric Lyons and these Synchrony adviser entities managed. The SEC alleges that Eric Lyons transferred hundreds of thousands of dollars from the Synchrony hedge funds to Eric Lyons’ personal bank accounts to pay for personal expenses, including frequent vacation travel, entertainment, rent, automobile lease payments, and other personal expenses. Further, the SEC alleges that Eric Lyons replaced some of the misappropriated money by engaging in a securities offering fraud, in which he obtained approximately $300,000 from an investor based on false and misleading statements about other potential large investors and a fabricated $100 million business valuation. In total, the SEC’s complaint alleges that Eric Lyons and the Synchrony adviser entities raised approximately $700,000 from their misappropriation and securities offering fraud schemes.
The SEC’s complaint, filed in U.S. District Court for the District of Massachusetts, charges Eric Lyons, Synchrony Capital GP, LLC, Synchrony Capital Group, and Synchrony Group, LLC with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act and Rule 206(4)-8 thereunder. The Court entered an order granting a temporary restraining order, asset freeze, and other emergency and ancillary relief.
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