SEC Charges Investment Adviser and Its Owner for Misappropriation of Fund Assets
April 30, 2020
File No. 3-19776
April 30, 2020 - The Securities and Exchange Commission today announced settled charges against registered investment adviser Monsoon Capital, LLC and its founder and owner, Gautam Prakash, of Maryland, for misusing over $1 million of private fund assets managed by Monsoon.
According to the SEC's order, from 2015 through early 2019, Prakash intentionally submitted false travel expenses for reimbursement, which Monsoon improperly expensed to a private fund it advised, Monsoon Infrastructure & Realty Co-Invest, L.P. (MIRC). As a result of this fraudulent practice, Prakash received more than $44,000 in excessive travel reimbursements that Monsoon charged to MIRC. In addition, the SEC's order finds that, in June 2017, Prakash breached his fiduciary duty when he borrowed $1 million in cash from MIRC to settle a personal trade.
The SEC's order finds that Monsoon and Prakash violated the antifraud provisions of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, as well as Rule 206(4)-8 thereunder. Without admitting or denying the findings in the SEC's order, Monsoon and Prakash agreed to cease and desist orders and to a joint and several penalty of $100,000. Monsoon also agreed to be censured, and Prakash agreed to a collateral associational bar and investment company prohibition.
The SEC's investigation was conducted by Janene M. Smith and supervised by Ranah L. Esmaili of the SEC's Asset Management Unit. The SEC appreciates the assistance of the National Futures Association.