A Wayland, Mass., money manager settled charges Wednesday with the Securities and Exchange Commission in connection with a multimillion-dollar Ponzi scheme.
A Wayland, Mass., money manager settled charges Wednesday with the Securities and Exchange Commission in connection with a multimillion-dollar Ponzi scheme.
Michael Regan and his firm, Regan & Co., an unregistered entity, was charged with defrauding investors of at least $16 million by selling securities in his now-defunct River Stream Fund, the SEC said in a release.
He and the company agreed to settle the claims by agreeing to an order that they are liable for more than $8.7 million in disgorgement and interest, and he also pleaded guilty in a related criminal proceeding in the U.S. District Court for the Eastern District of New York in Brooklyn, according to David Rosenfeld, associate director of the SEC’s New York regional office. Further financial penalties are to be determined later, Mr. Rosenfeld said.
Mr. Regan, who could not be reached for comment, provided fake account statements and tax forms to investors showing artificially inflated account balances concealing that he did no securities trading at all for several years and incurred substantial losses, the SEC said.
“Regan lured investors, including family and friends, by touting his investment process,” James Clarkson, acting director of the SEC’s New York regional office, said in a release. “He routinely fabricated investment returns to make it appear that he was a successful money manager when in fact he was stealing money to pay his own expenses,” he said.
Mr. Regan used less than half of the funds he received from investors for trading purposes, the SEC said. He misappropriated millions of dollars to satisfy withdrawal requests from some investors, and he used at least $2.4 million for person expenses, the agency said.
