SEC Obtains Final Judgment Against IIG Co-Founder for Engaging in Fraud
Litigation Release No. 25673 / March 23, 2023
Securities and Exchange Commission v. Martin Silver, Civil Action No. 1:21-cv-3179 (S.D.N.Y. filed Apr. 13, 2021).
On March 23, 2023, the U.S. District Court for the Southern District of New York entered a final consent judgment against Martin Silver, the co-founder of International Investment Group (IIG), a formerly registered investment adviser, enjoining him from violating the antifraud provisions of the federal securities laws.
According to the SEC's complaint, from October 2013 to at least July 2018, Silver, defrauded IIG's investment advisory clients by, among other things, grossly overvaluing the assets in IIG's flagship hedge fund. As alleged, the overvaluation of these assets resulted in the fund paying inflated fees to IIG, some of which went to Silver. The complaint further alleges that Silver falsely reported to investors that certain fake and overvalued loan assets, which IIG sold between funds it advised, were legitimate assets and fairly valued.
The complaint, filed in the U.S. District Court for the Southern District of New York, charges Silver with violating the antifraud 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) and 206(2) of the Investment Advisers Act of 1940. Silver, who cooperated with the SEC, consented to a bifurcated settlement, agreeing to be permanently enjoined from violations of the charged provisions, with monetary relief to be determined by the court at a later date upon motion of the Commission.
The final judgment orders disgorgement of $2,306,856, representing Silver's ill-gotten gains, and prejudgment interest of $243,403.98, and that disgorgement shall be deemed satisfied by the restitution order entered against him in the parallel criminal proceeding, United States v. Hu, et al., 20 Cr. 360 (S.D.N.Y.) (AKH). In that proceeding, Silver pleaded guilty and has been sentenced and ordered to pay restitution and forfeit assets.
The SEC previously charged IIG with fraud on November 21, 2019, and revoked IIG's registration as an investment adviser on November 26, 2019. On March 30, 2020, the SEC obtained a final judgment on consent enjoining IIG from violating the antifraud provisions of the federal securities laws and requiring IIG to pay more than $35 million in disgorgement and prejudgment interest.
The SEC's investigation was conducted by Lindsay Moilanen and Diego Brucculeri of the New York Regional Office, with assistance from Eli Bass of the Division of Examinations. The litigation was handled by Ms. Moilanen. The matter was supervised by Sheldon L. Pollock and Osman Nawaz. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.