U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23260 / May 13, 2015
Securities and Exchange Commission v. Ifitikar Ahmed, et al., Civil Action No. 3:15-cv-00675-JBA (D.Ct., filed May 6, 2015)
SEC Charges Connecticut-Based Investment Professional with Fraud and Self-Dealing
The Securities and Exchange Commission today announced it has obtained an asset freeze and other emergency relief against a Greenwich, Connecticut, investment professional charged with fraud and self-dealing at the venture capital firm where he was employed, Oak Investment Partners.
In a complaint filed in U.S. District Court in Connecticut on last Wednesday and unsealed today, the SEC alleges that Iftikar Ahmed illegally profited by having funds managed by Oak Investment Partners pay inflated prices for two e-commerce investments and by failing to disclose his beneficial interest in a company that the fund transacted with. The complaint alleges that Ahmed transferred approximately $27.5 million in illegal profits to accounts under his control at the expense of investors in the Oak funds, including public pension investors.
According to the SEC's complaint, Ahmed had Oak funds pay $20 million for a $2 million stake in an Asian e-commerce joint venture in December 2014, pocketing the $18 million difference for himself. It alleges that in another investment in August 2014, an Oak fund overpaid for shares in a China-based e-commerce company, allowing Ahmed to pocket $2 million. In a third transaction, the complaint alleges that in 2013, Ahmed advised an Oak fund to invest $25 million in a U.S.-based e-commerce company without disclosing his interest in I-Cubed Domains LLC, which had a significant stake in the same company. The following year, at Ahmed's advice, the Oak fund paid $7.5 million to I-Cubed to buy shares in the company that I-Cubed had acquired for $2 million. The complaint alleges that Ahmed again failed to disclose his ties to I-Cubed, violating his duty to act in the best interest of the Oak fund investors and avoid self-dealing.
The SEC's complaint charges Ahmed with violating federal antifraud laws and related SEC antifraud rules. The SEC is seeking a preliminary injunction to continue the freeze of Ahmed's assets and seeks to have Ahmed return his allegedly ill-gotten gains with interest and pay civil monetary penalties. The complaint names two firms allegedly controlled by Ahmed, Iftikar Ali Ahmed Sole Prop and I-Cubed Domains LLC, as relief defendants for the purpose of recovering allegedly ill-gotten gains.
The emergency court order obtained by the SEC freezes up to $55,089,446 million of Ahmed's assets, prohibits him from destroying evidence and orders expedited discovery.
The SEC's investigation, which is continuing, has been conducted by Jay A. Scoggins and Jeffrey E. Oraker of the Market Abuse Unit in the Denver Regional Office. The case has been supervised by Daniel M. Hawke, Chief of the SEC Enforcement Division's Market Abuse Unit, and Joseph G. Sansone, Co-Deputy Chief of the Market Abuse Unit. Nicholas P. Heinke and Mark L. Williams of the Denver Regional Office will lead the SEC's litigation. The SEC appreciates the assistance of the U.S. Attorney's Office in Boston, the U.S. Attorney's Office in Connecticut, and the Federal Bureau of Investigations.