SEC Obtains Judgments and Bar Against Former Hedge Fund CEO Related to Hedge Fund Valuation Scheme

Litigation Release No. 25532 / September 28, 2022

Securities and Exchange Commission v. Premium Point Investments LP et al., Civil Action No. 1:18-cv-04145 (S.D.N.Y. filed May 9, 2018)

On September 20, 2022, the U.S. District Court for the Southern District of New York entered a final judgment against New York-based investment adviser Premium Point Investments LP and Premium Point's CEO and chief investment officer, Anilesh Ahuja, relating to the inflation of the value of private funds they advised by hundreds of millions of dollars.

According to the SEC's complaint, the fraudulent valuation scheme ran from at least September 2015 through March 2016 and relied on a secret deal where in exchange for sending trades to a broker-dealer, Premium Point received inflated broker quotes for mortgage-backed securities. In addition, the defendants used "imputed" mid-point valuations, which were applied in a manner that further inflated the value of securities. This practice boosted the value of many of Premium Point's holdings and further exaggerated returns in order to conceal poor fund performance and attract and retain investors.

The Court entered a final judgment against Premium Point and Ahuja by consent, permanently enjoining them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, Sections 17(a)(1) and (3) of the Securities Act of 1933, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940, Rule 206(4)-8(a)(2) thereunder; permanently enjoining Premium Point from violating Advisers Act Section 206(4) and Rule 206(4)-2 thereunder; and ordering Ahuja to pay a civil penalty of $450,000. On September 28, 2022, the Commission barred Ahuja from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.

The SEC's litigation is led by Senior Trial Counsel Lee A. Greenwood and Co-Regional Trial Counsel Preethi Krishnamurthy of the New York Regional Office. The matter was investigated by the Division of Enforcement's Complex Financial Instruments and Asset Management Units, and is supervised by Osman Nawaz, Chief of the Complex Financial Instruments Unit.