SEC Files Suit Over $17M APEG Energy Fund
From the Desk of Jim Eccleston at Eccleston Law LLC:
Two Texas-based advisors allegedly misled investors regarding their background, experience and fees that they would collect, according to a recent SEC complaint. In pocketing nearly $2.7 million of investor funds, the SEC stated that the advisors, "effectively siphoned off the fund's capital by causing the fund to overpay for its investments in an effort to pay themselves whatever they wanted.”
The fund in question, APEG Energy LP, initially offered at least 115 investors a guaranteed, high rate of return. According to the SEC filing, the fund promised that investments in oil and gas were hedged against market fluctuations and that returns of 25% were guaranteed. However, there existed no hedge position and no way to guarantee the revenue. Further, the Texas-based advisors specified to investors that they required only a 2% management fee. According to the SEC, the advisors purchased oil and gas assets from four unnamed companies and were compensated at a much higher rate than the straight fee that was promised.
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