CCA allegedly made misrepresentations to investors in their Hedged Futures Strategy Fund
The Sonn Law Group is investigating allegations that Catalyst Capital Advisors made material misrepresentations to investors. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.
Jerry Szilagyi (CRD#: 11556349) is the CEO and president of Catalyst Capital Advisors, LLC (“CCA”). In September 2013, CCA launched the Catalyst Hedged Futures Strategy Fund (“Fund”) as an SEC-registered mutual fund. The fund invests mainly in options on the S&P 500 index futures contracts and is sold to investors via unaffiliated investment advisors and broker-dealers, according to the SEC.
In January 2020, CCA agreed to pay a combined $10.5 million to settle charges brought by the SEC that claimed it misled investors about the management of risk in the Fund. Between December 2016 and February 2017, the Fund lost hundreds of millions of dollars. According to the SEC, although the firm told investors that it abided by a strict set of risk parameters for the Catalyst Hedged Futures Strategy Fund, it breached those parameters and failed to take the required corrective action during a majority of the trading days between December 2016 and February 2017.
An alleged “core selling point” of the fund was CCA’s risk management procedures, the SEC said. But it said in the order: “In promoting such procedures, CCA and the Senior Portfolio Manager made material misstatements in investor-facing marketing documents and in telephone calls with investment advisers that it utilized stop-loss measures and triggers to exit positions that would limit the Fund’s losses.”
The SEC’s order found that CCA violated the antifraud provisions of federal securities laws and that Szilagyi was a cause of CCA’s violations. CCA and Szilagyi agreed to be censured, to cease and desist from future violations, and pay disgorgement of $8.2 million, plus prejudgment interest of $731,759, and a civil penalty of $1.3 million, the SEC said. Szilagyi, meanwhile, agreed to pay a civil penalty of $300,000. The payments will be placed in a fair fund to be distributed to affected investors, the SEC said.
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The Sonn Law Group is currently investigating allegations that Catalyst Capital Advisors made material misrepresentations to investors. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.