Kawamura Financial Served Cease And Desist By SEC For Fraud

Securities And Exchange Commission SECBy U.S. Government [Public domain], via Wikimedia Commons

The Securities and Exchange Commission (SEC) served a cease and desist order to Kawamura Financial yesterday. Kawamura Financial is owned by Keiko Kawamura of Honolulu, Hawaii. According to the SEC filing of April 8th, Kawamura was involved in “schemes to defraud and fraudulent misrepresentations and omissions by Keiko Kawamura in connection with money she raised for a self-described hedge fund that she purportedly managed, and money she obtained from subscribers to a website she operated to provide investment advice.”

SEC allegations

The SEC alleges that from December 2011 through June 2012, Kawamura accepted around $200,000 from at least seven investors for a “hedge fund” she claimed to manage. Instead of investing the funds she was given, Kawamura illegally misappropriated much of the money. Kawamura did invest some of the funds received from investors, but lost it all with poor timing in risky options trading. She was charging investors a performance fee of 20% of any profits achieved.

Also, in August 2012, Kawamura launched an investment advisory website (KawamuraFinancial.com) that she operated until February 2014. She used the website to provide investment advice to subscribers for a monthly fee. The SEC filing claims that Kawamura made more than $50,000 in subscription fees from approximately 70 different subscribers to her website.

False experience and performance claims

Furthermore, Kawamura falsely told investors that she had significant experience in the financial industry. She claimed she had several years of experience in the trading of stocks and options, and that she had a strong track record of profits trading stocks and options in her personal accounts.

In reality, her only prior trading experience had been a few trades over the prior few months in an account in her boyfriend’s name. She traded $10,000 in the brokerage accounts held in her name. None of her or her boyfriend’s accounts ever held more than $300,000.

Vacations to Miami and London

The SEC filing also alleges that Kawamura misappropriated much of the purported hedge fund’s capital to pay for her living expenses and to take luxury vacations to Miami and London.

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