The US Securities and Exchange Commission has persuaded a federal court to appoint a receiver to wind up Floridian investment advisory firm called TCA Fund Management Group Corp, its affiliate TCA Global Credit Fund GP Ltd and several funds managed by TCA on account of fraud.

The SEC’s complaint, lodged in the US District Court for the Southern District of Florida, alleges that TCA improperly recognised revenue in order to fraudulently inflate net asset values and performance for several funds that it managed, resulting in the funds always reporting good returns.

TCA allegedly distributed promotional materials to current and prospective investors that included the inflated asset values and false performance results. According to the complaint, the funds’ reported net asset value of US$516 million as of November 2019 was inflated by at least $130 million.  TCA and TCA Global Credit Fund also allegedly distributed monthly account statements to investors that lied about monthly returns and investment balances. The complaint goes on to allege that the funds paid management fees to TCA that were far too high and inflated performance fees that they charged TCA Global Credit Fund.

The head of the SEC’s Miami regional office said: “Investors were repeatedly presented a false picture of the TCA funds. The SEC sought the appointment of a receiver to help locate and preserve the funds’ remaining assets for the benefit of investors.”

The complaint charges TCA and TCA Global Credit Fund with breaking the anti-fraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains with pre-judgment interest and financial penalties. Its investigation of the matter continues.