The Securities and Exchange Commission announced today that it filed charges against Ramas Capital Management, LLC (RCM), a Houston, Texas-based investment adviser, and Ganesh H. Betanabhatla, its managing partner, chief investment officer, and owner, for alleged misrepresentations and breaches of fiduciary duty to a privately-managed fund and its sole investor.

According to the SEC's complaint, while acting as investment advisers to a private investment fund they formed, RCM and Betanabhatla made various misrepresentations and misused the fund assets. In particular, the complaint alleges that defendants falsely told the sole fund investor that they had already raised $25 million for the fund, that a well-known and respected energy investor identified by name was involved in the fund and supported the investment, and that the fund was a special purpose vehicle solely set up to invest in a specific portfolio company. The complaint alleges that, in fact, there were no other investors in the fund, the respected energy investor was not involved, and, after receiving the investor's $1 million, the defendants did not make any investment in the portfolio company and instead transferred most of that money to a completely different portfolio company related to one of RCM's earlier private investment funds.

The SEC's complaint, filed in U.S. District Court for the Southern District of Texas, charges RCM and Betanabhatla with violating the anti-fraud provisions of Section 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. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant.

The SEC's investigation was conducted by Payam Danialypour and supervised by Gary Y. Leung, both of the Enforcement Division's Asset Management Unit in the Los Angeles Regional Office. The litigation will be conducted by Keefe Bernstein and supervised by B. David Fraser, both in the Fort Worth Regional Office.