SEC Charges Former Executives of Registered Investment Adviser with Fraud
Washington D.C., Sept. 30, 2021 —
The Securities and Exchange Commission today charged Robert D. Press, the former CEO of the advisory firm TCA Fund Management Group Corp., and Donna M. Silverman, TCA’s former chief portfolio manager, for their roles in the firm’s scheme to artificially inflate the net asset values and performance results of several TCA-managed funds. The SEC previously charged TCA and another affiliated company, TCA Global Credit Fund GP Ltd. (TCA-GP), with fraud on May 11, 2020, and obtained the appointment of a receiver over those entities and the TCA funds. The SEC also previously charged two TCA executives for their roles in the alleged fraud.
The SEC’s order against Press finds that, through Press’s actions, TCA fraudulently inflated net asset values and performance of the TCA funds by recording non-binding transactions and fraudulent investment banking fees on the funds’ books and records. According to the order, the inflated asset values and false performance results were included in promotional materials and account statements distributed to the TCA funds’ current and prospective investors, which showed the funds as always having positive monthly returns. In fact, the order finds, without the fraudulently booked transactions, the TCA funds would have had at least 34 months of negative returns since inception. Among other things, the order also finds that on at least 14 separate occasions, Press made the decision to waive monthly management and performance fees the TCA funds owed to TCA or TCA-GP in order to achieve higher performance results, without disclosing to investors that the higher figures were due to the fee waivers, rather than the successful result of TCA’s investment strategies.
The SEC’s order against Silverman finds that she included the non-binding transactions and fraudulent investment banking fees in data she prepared that was used to calculate the TCA funds’ asset values and performance results.
“Over the course of years, Press and TCA gave investors a false portrayal of the TCA Funds’ investment success, with Press profiting from this misinformation,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Truthful fund performance and asset valuation information is what clients and investors expect and must get from investment advisers, and the SEC will continue to prosecute advisers who fail to provide that fundamental information.”
The SEC’s orders find that Press violated the antifraud provisions of the federal securities laws and that Silverman aided and abetted violations of certain antifraud provisions. Without admitting or denying the SEC’s findings, Press and Silverman each agreed to the entry of a cease-and-desist order. In addition, Press agreed to be barred from the securities industry, and to pay disgorgement of overcharged management and performance fees he received of $4,409,546 plus prejudgment interest of $755,178, and a penalty of $292,570. Silverman agreed to a limitation on activities from acting in a director or officer capacity in the securities industry, with a right to apply after three years, and to pay a penalty of $50,000.
The SEC’s investigation was conducted by Shan Chang and Raynette R. Nicoleau, under the supervision of Chedly C. Dumornay and Glenn S. Gordon, and with assistance from Stephanie Moot and Andrew O. Schiff. The investigative team was also assisted by Jose Molina, Victor Mendoza, William Tudor, Roda Johnson, Jeannie M. Cabot, and John C. Mattimore of the SEC’s Miami Regional Office.