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SEC Charges Investment Adviser for Misrepresentations in Private Fund Offering

June 24, 2022

File No. 3-20906

June 24, 2022 - The Securities and Exchange Commission today announced settled fraud charges against a Bahamas-based investment adviser, Geluk Capital Management Ltd., and its Fort Lee, New Jersey-based principal, Douglas G. Fathers, for misrepresenting key aspects of a private fund they offered and sold to investors in 2018.

The SEC's order finds that Geluk Capital and Fathers represented to investors and prospective investors that the Geluk Global Fund Limited SAC had its own proprietary trading strategy and risk controls that had resulted in a track record of consistently positive performance dating back to 2014. In reality, as stated in the order, the purported trading strategy, risk controls, and performance track record in the fund's offering materials belonged to a third-party manager to which Geluk Capital and Fathers sent investor money. In late 2019, the SEC brought an emergency action against the third-party manager and related individuals and entities for allegedly operating a Ponzi-like scheme. Furthermore, the order finds that Geluk Capital and Fathers charged the fund fees in a manner that was inconsistent with fund governing documents.

The SEC's order finds that Geluk Capital and Fathers violated the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. Geluk Capital and Fathers have agreed, without admitting or denying the SEC's findings, to a cease-and-desist order; joint and several disgorgement of $29,081, prejudgment interest of $3,607, and a civil penalty of $60,000; undertakings; and an industry bar and investment company prohibition as to Fathers.

The SEC's investigation was conducted by Jeffrey D. Felder and supervised by Kimberly L. Frederick and Jason J. Burt of the SEC's Denver Regional Office.

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