SEC v. Weston Capital Asset Management LLC, et al. Case No. 14-cv-80823-JIC (S.D. Fla.)
Oct. 5, 2022
On June 23, 2014, the Commission filed a complaint against Weston Capital Asset Management LLC ("Weston Capital"), and its founder and president, Albert Hallac ("A. Hallac"), and its former general counsel, CCO, and COO, Keith Wellner ("Wellner") (collectively, the "Defendants") and named Jeffrey Hallac, a managing member of Weston Capital, as a relief defendant ("Relief Defendant"). The complaint alleged that, from 2011 through at least July 2012, the Defendants violated federal securities laws when they illegally drained more than $17 million from a hedge fund they managed, and transferred the money to a consulting and investment firm, contrary to the hedge fund's stated investment strategy and was not disclosed to investors. See Complaint.
Collectively, the Defendants and Relief Defendant were ordered to pay a total of $1,676,686.35 in disgorgement, prejudgment interest, and penalties. The SEC was ordered to hold all funds, together with interest and income earned thereon (collectively, the "Fund"), pending further order of the Court. See Relief Defendant's Final Judgment, Wellner's Final Judgment, A. Hallac's Final Judgment, and Weston Capital's Final Judgment.
On October 12, 2017, the Commission filed a motion to appoint Michael S. Lim, a Commission employee, as the Fund Administrator; establish a Fair Fund for the monies in the Fund and any future monies paid; and approve the distribution plan (“Plan”). See Motion with Distribution Plan.
Also on October 12, 2017, the Court entered an order approving the Commission’s motion that established a Fair Fund for the $596,040.40 in disgorgement, prejudgment interest, and penalties paid by the Defendants and any future funds paid by the Defendants; appointed Michael S. Lim as the Fund Administrator to oversee the administration and distribution of the Fair Fund to harmed investors; and approved the Plan. See the Court’s Order.
The Plan provides that the distribution of the Fair Fund shall be made to Eligible Investors on a pro rata basis for the harm created by the Defendants’ conduct.
In 2019, the Commission distributed approximately $592,000 to investors eligible for a distribution under the Plan. All payments have been negotiated and the distribution is complete.
The Commission is continuing collection activities and, although a second distribution is not feasible at this time, the Commission believes it may collect sufficient funds to do another, smaller distribution to harmed investors in the future. See Status Report. Any harmed investor whose contact information changes should promptly inform the Commission staff at the email set forth below.
For more information, please contact the Commission:
Catherine E. Pappas
Office of Distributions