U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. LR 18623 / March 12, 2004
SECURITIES AND EXCHANGE COMMISSION v. GLOBAL MONEY MANAGEMENT, L.P., LF GLOBAL INVESTMENTS, LLC, and MARVIN I. FRIEDMAN, Civil Action No. 04 CV 00521 BTM (WMC) (S.D. Cal.)
COMMISSION FILES ACTION TO HALT ONGOING FRAUD BY OPERATORS OF UNREGISTERED HEDGE FUND IN SAN DIEGO
The Securities and Exchange Commission today announced the filing, on March 11, 2004, of an emergency action to halt an alleged ongoing multi-million dollar securities fraud, naming San Diego-based Global Money Management, L.P., (GMM) an unregistered private hedge fund, LF Global Investments, LLC (LF Global), which operated GMM, and Marvin I. Friedman, 65, of La Jolla, California, who is alleged in the Commission's complaint to have controlled both entities. The Commission's complaint alleges that the defendants grossly overstated the assets of GMM to investors.
Acting on the Commission's lawsuit, the Honorable Barry T. Moskowitz, United States District Judge for the Southern District of California, yesterday issued a temporary restraining order against GMM, LF Global, and Friedman, appointed a receiver over GMM and LF Global, and issued orders freezing the assets of the defendants, prohibiting the destruction of documents, and ordering accountings from the defendants. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for March 25, 2004.
The Commission's complaint alleges that since 1993, the defendants have sold, in an unregistered offering, limited partnership interests in GMM, a purported private hedge fund that invested in securities, such as stock and stock options. While the amount of money actually raised is not known, Friedman has told investors at various times over the last several months that the hedge fund held assets ranging from $60 million to over $100 million. GMM's brokerage records, however, show that, since at least December 2002, the securities it holds have been worth no more than $11 million. In addition, Friedman touted his investment experience but failed to inform investors about his disciplinary history, including that he has been barred from association with any member of the National Association of Securities Dealers.
The Commission's complaint alleges that GMM, LF Global, and Friedman violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, as to LF Global, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and, as to Friedman, that he aided and abetted those violations of the Advisers Act, seeking, in addition to the emergency relief described above, from each defendant, preliminary and permanent injunctions, disgorgement with prejudgment interest, and a civil penalty.