The U.S. Securities and Exchange Commission charged Northbrook, Ill.-based SBB Research Group LLC and its CEO Samuel Barnett and COO Matthew Aven with alleged fraud that inflated fund values and overcharged investors about $1.4 million in fees.
In its complaint filed with the U.S. District Court for the Northern District of Illinois, the SEC said SBB is a registered investment adviser to several private investment funds that invested almost all of the funds' money in structured notes.
The regulator said Barnett, Aven and SBB consistently represented to the funds' investors and SBB's outside auditor that they valued those structured notes at "fair value." But instead, the defendants intentionally rigged SBB's valuation model to inflate the recorded value of the funds' securities and make the funds' performance look much better than it actually was.
The SEC said the artificially inflated note values and the resulting inflated fund performance generated $1.4 million in improperly charged fees.
The complaint seeks permanent injunctions and civil penalties.
