On October 2, 2017, the Securities and Exchange Commission filed a complaint in the United States District Court for the Central District of California against Tweed Financial Services, Inc. (“TFSI”), an investment advisory firm, and its proprietor, Robert Russel Tweed (“Tweed”). The SEC’s complaint alleges that TFSI and Tweed “defrauded their clients by misleading them about how their money had been invested and how poorly those investments were performing.” According to the SEC, TFSI and Tweed violated the Investment Advisers Act of 1940 by deceiving their clients.
According to the SEC’s complaint, TFSI and Tweed formed Athenian Fund L.P., a private fund, in 2008. Twenty-four investors placed money in the Athenian Fund, and the fund raised approximately $1.7 million. The Athenian Fund’s private placement memorandum informed investors that money invested in Athenian Fund would be invested in a master fund that “had been established to trade stocks using an algorithmic trading platform developed by acquaintances of Tweed.” However, beginning in March 2010, Tweed transferred all of the Athenian Fund’s assets to another fund. In March 2011, TFSI and Tweed had the Athenian Fund loan $200,000 to a startup software company. The SEC alleged that these two ventures resulted in the Athenian fund losing approximately $800,000. Continue reading