No yield hungry investor wants to miss out on the next Google, the next big thing. But as this Securities and Exchange Commission civil prosecution shows the only big things in some start-ups may be fraud. A number of high net worth individuals thought an Orange County, California investment adviser was appealing. But they were mistaken and taken to the cleaners for $14 million for undisclosed and excessive fees, claims the SEC.
According to an SEC court filing, Stuart Frost and his investment advisory firm, Frost Management Company, raised $63 million from the investors to put into another firm he owned, Frost Data Capital (FDC) that was supposedly performing operational support and other services to help incubate a portfolio of start-ups. In reality, much of the money was said to have been diverted to fund a lavish lifestyle for him which included a boat, luxury cars and an archery range.
“When Frost needed more cash to fund his lavish lifestyle, he created new portfolio companies and, after investing more fund capital into the new companies, FDC then extracted even more incubator fees,” according to the SEC complaint. The SEC is alleging Frost and his investment advisory firm violated their fiduciary duties by keeping the super-charged fees hidden from the investors.
While these are only charges at this point against this Registered Investment Advisor, the SEC is seeking full disgorgement from Frost as well as interest. The entire complaint can be viewed at the SEC’s website. To learn about suing to recover these losses, please contact Stoltmann Law Offices in Chicago for more information.
Disclaimer
The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
PLEASE NOTE THIS IS ADVERTISING AND IT IS NOT A NEWSPAPER ARTICLE OR POST FROM AN INDEPENDENT OR NON-BIASED, NEWS SITE, NEWS SOURCE OR NEWSPAPER.
