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U.S. Securities and Exchange Commission


Litigation Release No. 22655 / March 20, 2013

Securities and Exchange Commission v. Andrey C. Hicks, Civil Action No. 11-mi-1147-RBC (United States District Court for the District of Massachusetts)


The Securities and Exchange Commission today announced that Andrey C. Hicks of Boston, Mass., has been sentenced to 40 months in prison in connection with criminal charges brought by the U.S. Attorney for the District of Massachusetts. In a criminal complaint unsealed on October 28, 2011, Hicks was charged with committing wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud, in violation of 18 U.S.C. Sections 1343, 1349, and 2. In addition to his prison term, Hicks was ordered to pay $2.3 million in restitution and faces three years of supervised release upon completion of his prison term. Hicks pled guilty to the charges on December 12, 2012.

On October 26, 2011, the SEC filed an emergency enforcement action charging Hicks and Locust Offshore Management, LLC, his investment advisory firm, with fraud in connection with misleading prospective investors about their supposed quantitative hedge fund and diverting investor money to the money manager's personal bank account. The SEC alleges in its complaint that Hicks and his advisory firm made misrepresentations about his education, work experience, and the hedge fund's auditor, prime broker/custodian, and corporate status when soliciting individuals to invest in the purported hedge fund, called Locust Offshore Fund, Ltd. By making these representations and creating other indicia of legitimacy, the SEC alleged that Hicks may have obtained at least $1.7 million from 10 investors and may have misappropriated at least a portion of these funds for personal expenses. In the Commission's action, the U.S. District Court in Massachusetts issued a temporary restraining order on October 26 that, among other things, freezes the assets of the money manager, his advisory firm, and the hedge fund. On October 28, 2011, the Court converted the temporary restraining order into a preliminary injunction that will continue the asset freeze and other relief until further order of the Court. On March 20, 2012, Judge Richard Stearns of the U.S. District Court for the District of Massachusetts entered final judgments by default against Locust Offshore Management, LLC, and its CEO, Andrey C. Hicks. The Judgments jointly and severally ordered Hicks and Locust Offshore Management to pay disgorgement of $2,481,004 and prejudgment interest of $31,054.39. In addition, Hicks was ordered to pay a civil penalty in the amount of $2,512,058.39, and Locust Offshore Management was ordered to pay a civil penalty in the amount of $2,512,058.39.

On June 15, 2012, SEC Administrative Law Judge Cameron Elliott entered an order making findings and imposing sanctions by default against Hicks barring him from association with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or national recognized statistical rating organization. And on June 19, 2012, ALJ Elliott entered a similar order against Locust Offshore Management barring it from acting as an investment adviser.

For further information, please see: Litigation Release Numbers 22141 (October 26, 2011) (Commission charges filed); 22144 (October 31, 2011) (criminal charges filed); 22302 (March 22, 2012) (final judgments in Commission's action).



Modified: 3/21/2013