SEC Charges Investment Adviser with Fraudulent Offer and Sale of Unregistered Funds

Litigation Release No. 25125 /June 29, 2021

Securities and Exchange Commission v. John Robert Jones, Jr., No. 3:21-cv-00098-TCB (N.D. Ga. filed June 28, 2021)

The Securities and Exchange Commission announced charges against investment adviser John Robert Jones, Jr. in connection with his alleged fraudulent offer and sale of two private unregistered funds he founded and controlled - PED Index Fund, L.P. and PED Index Fund A1, L.P.

The SEC's complaint, filed in the U.S. District Court for the Northern District of Georgia, alleges that Jones induced at least 24 investors to invest at least $5.1 million in the two funds by falsely promising growth and safety with limited risk. According to the complaint, from October 2017 through December 2018, Jones marketed the funds to investors, claiming that investors could lose only 10-15% of their principal investment, that investors' principal was insured, and that his investment strategy was created in concert with a purported national financial organization. As alleged, however, investors' downside exposure was not limited to 10-15%, there was no insurance protecting investors, and the national financial organization did not exist. The complaint further alleges that Jones received a 2% annual management fee, collecting at least $86,823, while investors lost approximately $2.6 million, or on average, 57%.

The SEC's complaint charges Jones with violations of 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), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8(a) thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC is seeking an injunction, disgorgement of allegedly ill-gotten gains with interest, and a civil penalty.

The SEC's investigation is being conducted by Gary Miller, and supervised by Elisha L. Frank, Fernando Torres, and Glenn Gordon. The litigation is being led by Andrew Schiff.