SEC Charges Former Portfolio Manager with Causing Violations by Fund Adviser and Principal

ADMINISTRATIVE PROCEEDING
File No. 3-20688

December 21, 2021 - The Securities and Exchange Commission today announced settled charges against New York resident Nicholas Abbate for his role in assisting others in a fraudulent course of business involving a registered investment company and an offshore mutual fund.

According to the SEC's order, beginning in 2016, Abbate held various titles, including Portfolio Manager, Chief Operating Officer, and Chief Investment Officer, at an SEC-registered mutual fund and its registered investment adviser, both of which were controlled by an individual based in California (Person A). The order finds that Abbate also agreed to assist Person A with the operations of a second fund that was formed in the Cayman Islands and not registered with the Commission. According to the order, Person A committed fraud in managing both funds and diverted investor assets to his own use. The order finds that Abbate assisted Person A with this fraudulent conduct by maintaining inaccurate information on fund websites, transmitting false information to investors, and refusing to honor a redemption request by the remaining investors in the offshore fund, all under Person A's supervision and direction.

The order charges Abbate with causing Person A's and the adviser's violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and with causing Person A's violations of Section 17(a)(3) of the Securities Act of 1933. Without admitting or denying the SEC's findings, Abbate consented to a cease-and-desist order and agreed to comply with an undertaking and pay a $30,000 civil penalty.

The SEC's investigation was conducted by Gregory C. Padgett, Alexandra M. Arango, Andrew M. Shirley, and David F. Miller, with assistance from Paul W. Kisslinger and Jan M. Folena, and supervised by Carolyn M. Welshhans, Adam S. Aderton, David A. Becker, and Virginia M. Rosado Desilets.