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Unregistered Adviser Settles Hedge Fund Fraud Charges

April 1, 2019

File No. 3-19128

April 1, 2019 - The Commission today settled fraud charges against Omar Zaki, a New York resident who ran an unregistered investment adviser and a hedge fund based in New Haven, Connecticut.

According to the SEC's order, Zaki misled fund investors about the fund's assets under management, performance, and management. Per the SEC's order, Zaki formed the adviser and the fund in 2016, and raised approximately $1.7 million from eleven investors. Among other things, the SEC's order found that Zaki provided two investors prospectuses containing false information about trading history, investment returns, and the composition of a fund management team. The SEC's order also found that Zaki made additional misrepresentations to one of these investors, including giving written presentations that falsely overstated the fund's assets and repeatedly concealing the true performance of the investor's investment in the fund. Shortly after making their investments in the fund, the two investors began exploring opening an offshore fund with Zaki. This plan unraveled when Zaki refused to allow the two investors to verify the fund's bank account and brokerage account balances directly with the custodians. Zaki then redeemed the investments made by the two investors. The fund is no longer active.

The SEC ordered Zaki, who agreed to settle the charges against him without admitting or denying the Commission's findings, to cease and desist from committing or causing violations of the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. The SEC's order also imposed associational and investment company bars against Zaki with a three year right to reapply, and ordered him to pay a $25,000 civil penalty.

The SEC's investigation was conducted by Jen Peltz, Rebecca Hollenbeck, and Robert M. Moye, and supervised by Paul Montoya, of the Chicago Regional Office.

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