U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21731 / November 4, 2010
Securities and Exchange Commission v. Alero Odell Mack, Jr., et al., United States District Court for the Central District of California, Civil Action No. CV 10-8383 DSF (PJWx)
SEC CHARGES LOS ANGELES-BASED HEDGE FUND MANAGERS WITH FRAUD AND MISAPPROPRIATION OF INVESTOR ASSETS
On November 4, 2010, the Securities and Exchange Commission filed a complaint in the United States District Court for the Central District of California against Alero Odell Mack, Jr., Steven Enrico Lopez, Sr., Easy Equity Asset Management, Inc., Easy Equity Management, L.P., Easy Equity Partners, L.P., Alero Equities The Real Estate Company LLC, and Alero I.X. Corp. The SEC alleges that the defendants perpetrated a $4 million hedge fund investment fraud.
The SEC alleges that Mack and Lopez made various false and misleading statements when offering or selling the investments, including touting double-digit past performance and future returns. They also represented that investor money would be used to trade securities, that Mack's entities had unique access to the NYSE trading floor, and that Mack was a "funding partner" with a major Wall Street investment bank. However, the SEC's complaint alleges that the performance claims were inflated and a large amount of investor money was used for purposes other than trading. The complaint also alleges that Mack's entities did not have unique access to the NYSE trading floor and Mack was not a "funding partner" of any Wall Street investment bank.
According to the SEC's complaint, Mack and Lopez used no more than $1.3 million of the $4 million of investor funds raised to trade securities. Mack and Lopez misappropriated the remaining investor funds for undisclosed personal purposes, and to pay referral fees to investors for bringing in new investors.
The SEC's complaint charges Mack, Lopez, Easy Equity Asset Management, Inc., Easy Equity Management, L.P., Easy Equity Partners, L.P., Alero Equities The Real Estate Company LLC, and Alero I.X. Corp. with violations of Section 17(a) of the Securities Act of 1933, and all of these defendants except Alero I.X. Corp. with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, the SEC's complaint charges Mack, Lopez and Easy Equity Management, L.P. with violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC seeks permanent injunctions, disgorgement of profits, and financial penalties against all defendants.
See Also: SEC Complaint