Speak To A Live Person: 888.302.4594 Request A Demo

The Incredulous Advisor

 
Friday, December 22, 2017

It boggles the mind when reading about the shenanigans of a very few disreputable Representatives. The Securities and Advisory businesses are easily amongst the most heavily regulated and scrutinized industries in a country that seems overly fond of regulation.
In a complaint dated April of 2017, the SEC alleged that Justin Meadlin of Hyaline Capital Management, LLC mislead the public and omitted material facts regarding Assets Under Management (AUM), fraudulently marketed his “Quantitative” Trading Strategy as well as the performance of his fund.

As early as September of 2012, Meadlin disseminated emails to prospective investors and clients that inflated his AUM. Hayaline Capital Quantitative Fund “HCQF” had never managed more than $5.5 million, yet he claimed to be managing between $17 – $25 million in AUM. Meadlin claimed HCQF had consistently positive historical performance returns dating back to 2009. Returns purportedly from a “proprietary” algorithm that the Defendants had acquired – none of this was true. In fact, HCQF did not exist (never had) and neither Meadlin nor Hayaline had ever acquired or created any “proprietary” algorithm. The touted returns were those generated by an unaffiliated trader who had generated them almost entirely from “paper” or “demo” trading (trading without any actual capital under management).

Through the courts, the SEC sought to permanently restrain and enjoin the Defendants from engaging in this conduct and the acts, practices and courses alleged of their business. The Commission also sought a final judgment ordering the Defendants to disgorge their ill-gotten gains and pay prejudgment interest and civil money penalties.

While a good Compliance program cannot make the dishonest honest, it can help find those playing loose with the rules. We love compliance so you don’t have to.

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.

  • Categories

  • Get Started