The U.S. Securities and Exchange Commission (SEC) filed a fraud charges against Sentinel Management Group Inc., for Chapter 11 bankruptcy protection. The cash management firm working in the U.S. futures industry is accused of violating the Investment Advisors Act, by defrauding its clients and leveraging their securities without informing them.
One of company’s biggest clients was Discus Master Limited, an investment partnership registered in the British Virgin Islands. During the hearings, which were held in the District Court in Chicago, this BVI company on behalf of its attorney Christian Kemnitz accused Sentinel of “disturbing” and “illegal behavior”.
In the complaint filed in the court, the SEC alleged that Sentinel transferred at least $460 million in securities from client investment accounts to Sentinel’s proprietary account. The SEC also claimed that defendant used securities from client accounts to obtain a $321 million line of credit and additional leveraged financing.
The Commission also charged Sentinel of disclosing from its clients that their investment portfolios were highly leveraged as a result of company’s financial deals; to the contrary, Sentinel provided its clients with statements that did not contain any information about the improper activities.
Now the Commission seeks an emergency court order that would restrain Sentinel from engaging in illegal conduct.