U.S. Attorney, SEC File Charges Against San Francisco Hedge Fund Manager

Aug 12 2016 | 12:51am ET

U.S. authorities have accused a San Francisco hedge fund manager with fraud for allegedly misrepresenting the amount of money the firm had under management and diverting investor capital for unauthorized personal and business expenses. 

Nicholas Mitsakos and his firm, Matrix Capital Markets, are alleged to have falsely marketed themselves as experienced money managers with a highly successful track record and assets under management in the millions, according to an SEC complaint. In fact, the SEC contends, the firm did not manage any actual client assets at all, and the returns cited were based on a hypothetical portfolio instead of real trading.

Moreover, Mitsakos and Matrix Capital are alleged to have spent $800,000 from a $2 million investment in September 2015 on car payments, credit cards, rent and legal bills, according to the SEC complaint.

In addition to the civil charges filed against Mitsakos and Matrix by the SEC, the U.S. Attorney’s Office for the Southern District of New York has reportedly also filed parallel securities fraud, wire fraud and conspiracy charges against Mitsakos.

“We allege that Mitsakos and his firm tried to lure prospective investors with a mirage of assets under management and phony performance results, and when they finally won some actual business from a client, they proceeded to steal a large portion of it,” said Andrew Calamari, Director of the SEC’s New York Regional Office, in a statement.  “Whenever pitched an investment opportunity with claims of lofty historical performance, it’s important for investors to take the time to verify the information and make sure they’re getting the truth before deciding to invest.”

According to Mitsakos’ LinkedIn profile, Matrix Capital launched in 2015 as a “value-based public equity investment fund” which invests a long/short strategy. No additional details about the fund’s structure were immediately available. 

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