SEC Charges Hedge Fund Adviser With Deceiving Investors by Inflating Fund Performance

SEC Press Release 2018-83
The Securities and Exchange Commission today announced that it has charged
New York-based investment adviser Premium Point Investments LP with inflating the value of private funds it
advised by hundreds of millions of dollars. The SEC also charged Premium Point’s CEO and chief investment
officer Anilesh Ahuja as well as Amin Majidi, a former partner and portfolio manager at the firm, and former trader
Jeremy Shor.
According to the SEC’s complaint, the scheme ran from at least September 2015 through March 2016 and relied
on a secret deal where in exchange for sending trades to a broker-dealer, Premium Point received inflated broker
quotes for mortgage-backed securities (MBS). In addition, the defendants allegedly used “imputed” mid-point
valuations, which were applied in a manner that further inflated the value of securities. This practice allegedly
boosted the value of many of Premium Point’s MBS holdings and further exaggerated returns. The complaint
alleges that the defendants overstated the funds’ value in order to conceal poor fund performance and attract and
retain investors.
“Investors rely on their investment advisers to fairly and accurately value securities, and that is especially true
when the securities trade in opaque markets,” said Daniel Michael, Chief of the Enforcement Division’s Complex
Financial Instruments Unit. “As we allege, Premium Point masked its true performance, which denied investors
the opportunity to make informed investment decisions.”
The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges the defendants with
fraud, with aiding and abetting fraud, or both. The SEC complaint seeks permanent injunctions, return of allegedly
ill-gotten gains with interest, and civil penalties.
The U.S. Attorney’s Office for the Southern District of New York, which conducted a parallel investigation of this
matter, today announced charges against Ahuja, Majidi, and Shor.
The SEC’s investigation, which is continuing, was conducted by H. Gregory Baker and Brian Fitzpatrick of the
Asset Management Unit, Osman Nawaz of the Complex Financial Instruments Unit, and Preethi Krishnamurthy of
the New York Regional Office under the supervision of Mark D. Salzberg of the Asset Management Unit. The
litigation is being conducted by Ms. Krishnamurthy, Mr. Baker, and Mr. Nawaz. The SEC acknowledges the
assistance and cooperation of the U.S. Attorney’s Office and the FBI in this matter.