In its complaint, the SEC’s enforcement division said that the fund’s board was misguided about the nature, extent, and quality of services that the firm could deliver.
In fact, Chariot Advisors was neither offering nor was able in dealing in the currency trading, but exaggerated the competitive benefits of algorithmic trading in two presentations before the board.
Following introduction of the fund, Chariot Advisors failed to leverage an algorithm model to execute the fund’s currency trading as represented to the board, instead appointed an individual trader to use discretion on trade selection and execution.
Due to their wrongdoings, Chariot fund’s registration statement and prospectus filed with the SEC and viewed by investors was full of misrepresentations and omissions.
SEC enforcement division asset management unit co-chief Julie Riewe said that it is critical that investment advisers provide truthful information to the directors of the registered funds they advise.
"Both boards and advisers have fiduciary duties that must be fulfilled to ensure that a fund’s investors are not harmed," Riewe added.
Chariot and Shifman have been charged by the SEC for violating various federal securities regulation including Sections 15(c) and 34(b) of the Investment Company Act of 1940 and Sections 206(1), among others.
