The U.S. District Court for the Southern District of New York has ordered Justin Meadlin, who co-founded Hyaline Capital Management LLC, to disgorge $150,645.66 plus prejudgment interest of $12,771.39, and pay a civil money penalty of $150,000 to the Securities and Exchange Commission.
In its April complaint against Meadlin and the company, the SEC alleged that he engaged in a scheme to induce clients, and prospective investors and clients, to invest funds through fraudulent misrepresentations and omissions of material fact.
Between September 2012 and April 2013, Meadlin disseminated dozens of emails to prospective investors and clients, in which he "materially inflated" Hyaline's assets under management, according to the lawsuit. Although Hyaline never managed more than $5.5 million during that time period, Meadlin falsely claimed in his emails to be managing, variously, between $17 million and $25 million in Hyaline's assets.
The complaint also alleged that Meadlin touted a fictitious Hyaline Capital Quantitative Fund in email solicitations to more than two dozen prospective investors and in subscription hedge fund databases.
In addition, on Dec. 13, the SEC entered an order on consent barring Meadlin from the securities industry, with a right to reapply after five years.