The United States District Court for the Southern District of New York issued a preliminary injunction against Moazzam “Mark” Malik, a fake hedge fund manager, who was charged with securities fraud.
Preliminary injunction against Mark Malik
The Securities and Exchange Commission (SEC) said the preliminary injunction from the court prohibited Malik and his purported hedge fund, American Bridge Investment Group d/b/a Wolfe Hedge from violating securities laws.
The court also froze the assets of Malik and his purported hedge fund. The defendants were required to provide verified written accountings, and they were prohibited from altering, concealing or destructing documents.
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SEC allegations against Mark Malik
On February 13, the SEC filed an emergency action against Malik on allegations that he deceived investors since May 2011 after selling them limited partnership interests in his hedge fund. The court issued a temporary restraining order against the fake hedge fund manager on the same day.
According to the SEC, Malik defrauded at least sixteen investors by falsely claiming that he is operating a hedge fund that is open to high net worth and sophisticated investors.
Malik claimed that his purported hedge fund consistently generated high returns. He described his hedge fund to investors as a “privately held global investment management firm dedicated to individuals and institutions around the world.” He claimed that his firm had approximately $100 million in assets under management (AUM).
The SEC said Malik committed an “egregious fraud” given the fact his hedge fund’s trading account never held more than $90,177 in assets despite raising $840,774 from investors. The trading account of his hedge fund has been closed since September 2013.
According to the Commission, Malik misappropriated more than $700,000 of investor funds for his personal use while simultaneously ignored the repeated request of investors for him to return their funds.
Court documents showed that Malik had an aggressive temper, and he used a list of excuses including faking his death. He even told investors to “go f—k yourself.”
According to the SEC, Mark Malik and his fund violated violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b). He also violated Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8.
The Commission is seeking final judgment prohibiting Malik from violating securities laws and imposing civil monetary penalties. The SEC also wants the court to order Malik and his firm to disgorge Ill-gotten gains plus prejudgment interests.