SEC Obtains Asset Freeze Against Kinetic Investment Group, LLC, Based on Alleged Sales of Fraudulent, Unregistered Securities

Kinetic allegedly raised approximately $39 million from at least 30 investors by selling these securities. 

The Sonn Law Group is investigating allegations that Kinetic Investment Group sold fraudulent, unregistered securities. 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.

On March 6, 2020, the SEC obtained an asset freeze and other emergency relief against Florida-based investment adviser Kinetic Investment Group, LLC and its managing member, Michael Scott Williams, in connection with an alleged fraudulent, unregistered securities offering that raised approximately $39 million from at least 30 investors located mostly in Florida and Puerto Rico.

According to the SEC’s complaint, Kinetic Group and Williams fraudulently raised millions of dollars by making material misrepresentations to investors who they solicited to invest in Kinetic Funds I, LLC, a purported hedge fund that they managed. The defendants allegedly represented, among other things, that Kinetic Funds’ largest sub-fund invested solely in U.S.-listed financial products and that at least 90% of its portfolio was hedged using listed options.

Contrary to these representations, Williams actually invested a significant part of the sub-fund’s assets in a private start-up company owned by Williams. The complaint further alleges Williams misappropriated at least $6.3 million through undisclosed loans to himself and his entities.

On March 6, 2020, the district court granted the SEC’s request for emergency relief, including an asset freeze and an order for records preservation, against Kinetic Group, Williams, and a number of companies charged by the SEC as relief defendants. The court also granted the SEC’s request to appoint Mark Kornfeld as receiver over Kinetic Group and the relief defendants.

The SEC’s complaint alleged that Kinetic Group and Williams violated Section 17(a) of the Securities Act of 1993, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1), 206(2), 206(4) and Rule 206(4)-8 of the Investment Advisers Act of 1940 (“Advisers Act”). The SEC’s complaint also charges Williams, in the alternative, with aiding and abetting Kinetic Group’s violations of Sections 206(1), 206(2), 206(4) and Rule 206(4)-8 of the Advisers Act. 

The SEC seeks injunctions, disgorgement of allegedly ill-gotten gains, with pre-judgment interest, and financial penalties against the defendants. Their investigation is ongoing.

Contact Us Today

The Sonn Law Group is currently investigating allegations that Kinetic Investment Group sold fraudulent, unregistered securities. 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.