In its complaints, the SEC alleged that since at least November 2011, Jason Konior and his firms raised approximately US$11 million by selling investors limited partnership interests in Absolute Fund LP, an investment vehicle that Konior claimed had US$220 million in trading capital.
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The complaints further alleged that Konior and his firms falsely claimed that Absolute Fund would allocate millions of dollars in matching investment funds, place the combined funds in brokerage accounts through which investors could trade securities, and operate a "first loss" trading program that would allow investors to dramatically increase their potential profits.
However, the SEC alleged that instead of using investor funds for trading purposes, Konior and his firms Absolute Fund Advisors (AFA) and Absolute Fund Management (AFM) siphoned off approximately US$2 million of the proceeds to pay redemptions from earlier investors and to pay their personal and business expenses.
The SEC obtained an asset freeze against Konior and his companies late yesterday in federal court in Manhattan.
"Konior falsely portrayed Absolute Fund as a legitimate investment vehicle designed to maximize investors’ access to trading capital in order to grow their hedge fund businesses," said Bruce Karpati, co-chief of the SEC Enforcement Division’s Asset Management Unit. "In reality, Konior’s operation became a way for Konior to funnel cash to his firms and himself for unauthorized purposes."
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By GlobalData
