The Securities and Exchange Commission (SEC) recently charged Derek Taller, the CEO and Chairman of the Board of Directors of two investment funds and their external investment adviser firms, with engaging in fraudulent conduct while managing and advising the two funds, which included making material misrepresentations in offering materials and engaging in self-dealing.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Taller with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Section 57(a)(4) of the Investment Company Act of 1940 and Rule 17d-1 thereunder.
The complaint alleges that Taller disseminated offering documents, containing multiple material investment objectives and portfolio valuations, to prospective investors in Vision Holdings, an unregistered fund, which stated that the fund was supervised by an independent board of directors and its financial statements would be audited by an independent auditor from one of the “Big Four” accounting firms. These representations were false, as Vision Holdings never engaged an independent auditor, did not have an audit committee, and Taller was the only active board member at the time, so he had ultimate authority over these offering documents, as per the SEC complaint.
In addition, the SEC alleged that Taller, through a trust established nominally in the name of his family members, secretly acquired an interest in a third-party startup and, days later, directed Vision Holdings and StHealth Capital, a business development company which he controlled, to loan the startup a combined $2 million without disclosing to the funds or their investors his interest in the startup borrower. These loans constituted a joint arrangement, which required StHealth Capital to obtain an SEC order prior to entering such transaction, which Taller never sought.
Taller allegedly directed Vision Holdings to loan more than $21 million to the startup and its affiliates, without disclosing to the fund or its investors that he had separate business dealings with the startup and its affiliates which created a conflict. Moreover, Taller allegedly misappropriated hundreds of thousands of dollars from the funds he advised to pay for personal crypto purchases and other unrelated expenses.
The SEC seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, civil penalties, and an officer-and-director bar.
SEC Investment Fraud Attorney David Chase, Esq.
Nationally acclaimed SEC defense attorney, David Chase of the Law Firm of David R. Chase, based in Fort Lauderdale, Florida, represents individuals and companies under SEC investigation throughout the nation. David previously served as Senior Counsel in the SEC’s Enforcement Division in the SEC’s Miami Regional Office and thus knows how the SEC conducts its investigations and prosecutions. If you are under SEC investigation, or just received a SEC Subpoena, call David now at: 800-760-0912, e-mail him at: david@davidchaselaw.com or visit the Firm’s website at: www.securitiesfrauddefense.net.
