U.S. Securities and Exchange Commission
Litigation Release No. 21840 / February 7, 2011
SEC v. William J. Reid, Algorithmic Trading Advisors, LLC and World Stock Fund, L.P., Civil No. 4:11-cv-0016 (USDC S.D. Georgia, Filed February 2, 2011).
The United States Securities and Exchange Commission (Commission) announced the filing of a complaint in federal district court against William J. Reid (Reid), Algorithmic Trading Advisors, LLC (ATA) and World Stock Fund, L.P. (WSF), alleging unregistered fraudulent offer and sale of WSF’s securities through WSF’s adviser ATA.
The complaint alleges that Reid established accounts for WSF with well-known investment reporting services and provided those services with materially false information concerning WSF’s investment returns and the size of its fund. The materially false information included representations that WSF had positive returns in 30 out of 37 months from the period of January 2007 through January 2010 and that WSF had up to $13 million in assets under management. In fact, WSF did not exist until June 2008 and had less than $400,000 in assets under management.
On February 3, 2011, the United States District Court for the Southern District of Georgia entered final judgments against Reid, ATA and WSF. Reid and ATA were enjoined from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Reid and ATA were ordered to disgorge $15,252.62 representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest of $619.66 and ordered to pay a civil penalty of $5,000. WSF was enjoined from future violations of Sections 5(a) and 5(c) of the Securities Act and Section 7(a) of the Investment Company Act of 1940.
Reid, WSF and ATA consented to the entry of the final judgments without admitting or denying any of the allegations in the Complaint.