Investment Professional Charged with Fraud, Self-Dealing by SEC
The SEC charged another investment professional with fraud and self-dealing. SEC v. Ahmed, Civil Action No. 3:15-cv-00675 (D. Conn. Filed May 5, 2015). Defendant Iftikar Ahmed is an investment professional who was a partner at Oak Investment Partners, a multistage venture capital firm. It advises several funds, each of which invests investor funds in various entities. Those investors range from individuals to institutions and pension funds.
As a general partner at Oak Investment Mr. Ahmed identified and recommended investment opportunities for the funds advised by the firm. Part of his duties included specifically recommending the purchase of securities and advising on the price. He also managed investments he recommended.
Beginning in October 2013, and continuing through the end of 2014, Mr. Ahmed recommended that Oak Investment funds make significant investments in three companies:
Chinese e-commerce firm: In August 2014 Mr. Ahmed recommended an investment in a Chinese e-commerce company whose shares were held by an offshore firm. Although he knew, according to the complaint, that the shares were being offered at $1.5 million, he recommended that the fund pay a price which was $2 million more – that is, $3.5 million. To support the recommendation Mr. Ahmed made false representations regarding the finances of the firm. The fund purchased the shares for $3.5 million. Mr. Ahmed arranged for the purchase price to be wired to Iftikar Ali Ahmed Sole Prop, a claimed business with a BVI bank account where the seller was supposed to be located. In fact the firm’s bank account listed the address of Mr. Ahmed’s Connecticut residence. Later the $2 million was transferred to a personal bank account in the name of Mr. Ahmed and his wife.
Asia based joint venture: A second recommendation was made at the end of 2014. In this instance Mr. Ahmed arranged for an Oak Investment fund to purchase the shares of an Asia-based joint venture from its two partners. Although the offering price was $2 million, the fund was told by Mr. Ahmed that it was $20 million. Again he made false representations regarding the finances of the joint venture to support his claim. Mr. Ahmed then made arrangements for the payment to be wired in two installments, one of $2 million and a second of $18 million. The latter was to go to the BVI based partner and transferred to the partnership. Again the funds were wired to Iftikar Ali Ahmed Sole Prop. The funds were never transferred to the partnership. Mr. Ahmed had purported deal documents e-mailed to an Oak Investment employee showing the deal closed.
E-commerce firm: In late 2013 Mr. Ahmed made the first of two recommendations regarding the purchase by an Oak Investment fund of shares in an e-commerce company. At the time of the recommendations a substantial portion of those shares were owned by I-Cubed, a firm initially owned by Mr. Ahmed and later his wife. Initially, Mr. Ahmed recommended a $25 million purchase. He did not disclose his interest in the firm. Later he advised the fund to purchase additional shares of the e-commerce company directly from I-Cube. Although his firm purchased those shares in late 2012 for $2 million he advised the fund to pay $7.5 million. His interest in I-Cube was not disclosed.
The complaint alleges violations of Exchange Act Section 10(b), Securities Act Section 17(a) and Advisers Act Sections 206(1), 206(2), 206(3) and 206(4). The case is pending. See Lit. Rel. No. 23260 (May 13, 2015).