U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23795 / March 30, 2017
SEC v. Clayton A. Cohn, et al., No. 13-cv-05586 (N.D. Ill. filed Aug. 6, 2013)
United States v. Clayton Andrew Cohn, No. 1:16-cr-00325 (N.D. Ill. filed May 19, 2016)
SEC Obtains Final Judgment Against Clayton A. Cohn
The Securities and Exchange Commission announced today that it has obtained a final judgment against Clayton A. Cohn, a former Marine accused of masquerading as a successful trader to defraud fellow veterans, current military, and other investors.
On August 6, 2013, the SEC obtained an emergency court order to halt an alleged hedge fund investment scheme orchestrated by Cohn through his investment adviser, Marketaction Advisors, LLC. According to the SEC's complaint, Cohn raised nearly $1.8 million from investors through his hedge fund by lying to investors about his success as a trader, the performance of the hedge fund, his use of investor proceeds, and his personal stake in the hedge fund. The complaint alleges that Cohn invested less than half of the money raised from investors and used more than $400,000 for personal expenses and to fund a luxurious lifestyle. Cohn allegedly used his lavish lifestyle to portray himself as a successful trader and investor, when in reality he lost nearly all of the money invested. According to the SEC's complaint, in order to cover up his trading losses and misappropriation of investor funds, Cohn generated phony hedge fund account statements that claimed annual returns of nearly 200%.
Cohn separately was charged criminally based on the same conduct alleged in the SEC's complaint. On July 5, 2016, Cohn pleaded guilty and, on January 24, 2017, Cohn was sentenced to 52 months in prison, to be followed by two years of supervised release, and was ordered to pay $1,556,488.11 in restitution to defrauded investors.
The final judgment, entered on March 30, 2017 by the Honorable Milton I. Shadur of the U.S. District Court for the Northern District of Illinois, permanently enjoins Cohn from violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and orders him liable for $1,556,488.11 in disgorgement, payment of which is deemed satisfied by the entry of the criminal restitution order. The SEC also dismissed its claims against Marketaction Advisors, LLC, since the entity is defunct and has no assets. The court's entry of this judgment resolves the SEC's action in its entirety.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Illinois and the Federal Bureau of Investigation.