Disgorgement is such an ugly word.
But it could happen to Jason J. Koiner, a New York-based ‘fund manager’ and his two firms Absolute Fund Management and Absolute Fund Advisors.
The SEC alleges that since November 2011 Koiner raised $11 million selling investors limited partnership interests.
He promised investors that he would allocate capital of nine times the value of their investment contributions to them, which they would have access to from a subaccount at a broker-dealer. Those funds could then be used to exchange securities.
He also told them he would allocate trading losses to the investor’s contribution first and then trading profits would be split between the investors and the firm.
The SEC’s complaint states that Koiner was not actually operating on this first loss basis – he did not match investors’ funds – nor did he return the investor contributions when they were demanded of him.
The SEC also alleges that instead he shaved $2 million off the top, and has ordered “permanent injunctive relief, disgorgement of ill-gotten gains, and financial penalties.”
Koiner neither confirms nor denies the allegations but has agreed to an order which freezes the assets of his two firms.