On March 21, 2018, the Securities and Exchange Commission (“SEC”) announced that it obtained a preliminary injunction and asset freeze against Nicholas Genovesa, his hedge fund, Willow Creek Investments LP (“Willow Creek”), and his advisory firm, Willow Creek Advisors, LLC. The SEC had previously filed charges on February 2, 2018 against Genovese and his hedge for committing fraud.
In its complaint, the SEC alleged Genovese and Willow Creek raised $5.3 million in funds from investors by making several material misrepresentations. Genovese allegedly misrepresented to the investors that he had previously managed $4 billion of assets in another fund. He also allegedly misrepresented that Willow Creek Advisors was managing between $30-$39 billion in assets and had between 42 and 60 employees when in it actually managed less than $10 million in assets and had less than 10 employees.
The SEC also alleged Genovese misappropriated investors’ funds from Willow Creek to fund security trading in his personal brokerage account, which sustained $8 million in losses. Additionally, the SEC alleged Genovese misappropriated about $263,000 of investors’ funds that he used for personal expenses, including chauffer, food, and hotel charges.
Options for Investors to Recover Losses
If you sustained losses because your broker or advisor recommended that you invest in Willow Creek Investments, you may have a claim for your losses.
Rules and regulations require investment brokers and advisors to recommend only suitable investment products and strategies to their customers. This requires brokers and advisors to be familiar with their customers and their investment needs. This also requires brokers and advisors to be knowledgeable of investments like Willow Creek to ensure they are suitable for a particular customer.
Additionally, rules and regulations require brokerage firms to closely monitor and supervise their brokers and advisors to ensure they do not violate securities rules by recommending unsuitable investments to their customers. That includes ensuring their brokers do not negligently recommend their customers invest in ponzi schemes.
When brokers and firms breach these duties, their customers have a right to pursue claims for their losses through FINRA arbitration. Contact Marquardt Law Office LLC to speak to an attorney if you believe you suffered losses due to your broker’s or firm’s misconduct.
Marquardt Law Office LLC is a securities law firm located in Chicago, IL that represents clients nationwide who have suffered losses due to misconduct such as fraud and negligence.