NEW YORK (Reuters) - Securities regulators accused two hedge fund managers in Miami of lying to investors about whether they had put any of their own money into a fund they were managing, according to court papers filed on Tuesday.
The Securities and Exchange Commission announced a settlement with Javier Guerra and Ralph Patino, two managers of Quantek Asset Management. The SEC said Guerra and Patino assured institutional investors that they had “skin in the game” and had put their own money into the fund. But regulators said that was not the case.
The SEC also said Quantek misled investors about loans it made to entities related to Guerra, who was the lead principal of Quantek until he resigned last October.
Guerra and Patino settled without admitting or denying wrongdoing and agreed to pay a total of $3.1 million in disgorgement and penalties.
Both men have been barred from associating with or working for registered financial firms, Guerra for five years and Patino, who was the director of operations at Quantek, for one year.
“We’re pleased to put the matter behind us and to have resolved the matter,” said Patino’s lawyer, Stanley Wakshlag, an attorney at Kenny Nachwalter in Miami.
In a press release, Guerra said, “I am proud of what we achieved at Quantek.”
A spokesman for Guerra said he is now a private investor and that he had no comment on whether he would start another fund after the five-year ban ended.
“When making an investment decision, private fund investors are entitled to the unvarnished truth about material information such as management’s skin in the game or the adviser’s handling of related-party transactions,” Bruce Karpati, co-chief of the SEC Enforcement Division’s Asset Management unit, said in a press release.
Quantek was a registered investment adviser, allowing it to manage money from pension funds and other institutional investors.
Quantek had about $1 billion in assets under management at its peak. Its main fund focused on Latin America. It is now in liquidation.
Reporting By Emily Flitter; editing by John Wallace