INVESTORS: Cornerstone Acquisition & Management Company and its principals were charged with fraud by the SEC.
On May 27, 2022, the SEC announced that it filed charges against previously registered Rancho Santa Fe, California-based investment adviser Cornerstone Acquisition & Management Company LLC (“Cornerstone”), its chief executive officer, portfolio manager, and chief compliance officer, Derren Lee Geiger, and its chief financial officer, She Hwea Ngo, for allegedly making false and misleading statements, committing other deceptive acts, and committing recordkeeping and compliance violations.
According to the SEC’s complaint, Cornerstone, Geiger, and Ngo engaged in a scheme to deceive investors in Cornerstone’s private funds, including the Caritas Royalties Fund (Bermuda) Ltd. (the “Bermuda Fund”), which had U.S. tax-exempt and non-U.S. investors. Their deceptive conduct reportedly included misstatements about the ownership of Cornerstone, the existence of collateral, and other material issues. The SEC also alleges that Cornerstone and Geiger failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and that Cornerstone and Ngo created inaccurate books and records.
The SEC charged: (i) Cornerstone, Geiger, and Ngo with violations of the antifraud provisions of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder; (ii) Cornerstone and Geiger with violations of Advisers Act Sections 206(4) and Rule 206(4)-8 thereunder and 207; (iii) Cornerstone with violations of Advisers Act Sections 204 and Rule 204-2 thereunder and 206(4) and Rule 206(4)-7 thereunder; (iv) Geiger with aiding and abetting Cornerstone’s violations of Advisers Act Section 206(4) and Rule 206(4)-7 thereunder; and (v) Ngo with aiding and abetting Cornerstone’s and Geiger’s Advisers Act violations except for Advisers Act Section 206 and Rule 206(4)-7 thereunder. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants.
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