Losses with AlphaBridge Capital Management?
Have you lost money investing in the AlphaBridge Fixed Income Master Fund, AlphaBridge Fixed Income Fund, or the AlphaBridge Fixed Income Partners, LP? We are investing allegations made by the Securities and Exchange Commission (SEC) against the investment adviser of these funds, AlphaBridge Capital Management LLC (or “ACM”). According to allegations made by the SEC in its complaint against AlphaBridge Capital Management and its owners and executives, Thomas J. Kutzen and Michael J. Carino, AlphaBridge over-inflated the values of the internal holdings in these funds, which deceived investors and the auditors who reviewed them.
According to the complaint, Thomas J. Kutzen was the founder, part owner, and CEO of AlphaBridge Capital Management. Michael J. Carino was also a part owner, as well as the Chief Compliance Officer of AlphaBridge. AlphaBridge Capital Management was an SEC-registered investment adviser, and its main function was to manage and operate the AlphaBridge Fixed Income Master Fund and its two feeder funds, AlphaBridge Fixed Income Fund, or the AlphaBridge Fixed Income Partners, LP. These funds invested in a number of fixed income investments, like mortgage backed securities and U.S. Treasuries. ACM was paid a management fee, comprising of 2% of the total assets in the fund, plus 20% of net profits.
Per securities industry rules, ACM was required to provide valuations for the internal assets of the funds, which were then to be verified by an independent auditor. Because some of the internal assets of the funds were thinly traded with a very small market, price quotes were not easy to get. ACM told the funds’ investors and its auditor that the adviser had obtained price quotes from independent sources, but beginning in 2010, ACM supplied its own valuations to two registered representatives to pass off as their own. ACM would then use these quotes to value these internal holdings.
In 2011 and 2012, these price quotes became widely divergent from other valuations sources, which led the valuations of the AlphaBridge funds to be over-inflated. Once an outside audit was performed in January 2014 and switched to a different valuation methodology, the net asset value of the fund was written down significantly. The net assets of the funds were written down from $138 million to $48 million, a 65% drop. The over-inflated valuations allowed ACM to take significantly higher management fees, and thereby defrauded investors, according to the allegations of the SEC.
The funds are in the process of winding down. As part of its investigation, the SEC is ordering that an independent party is used to monitor the winding down process. The SEC also seeks to have ACM withdraw its investment advisery license. Moreover, the SEC has ordered ACM to pay $5 million in restitution and fines.
The SEC also brought a complaint against Richard Lawrence Evans, one of the registered representatives who sold interests in the AlphaBridge funds.
Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado and the Seattle area. We represent investors in FINRA arbitration proceedings and court. Our attorneys have represented over one thousand investors against many brokerage firms in the past, including LPL Financial, Merrill Lynch, Morgan Stanley, Smith Barney, Stifel Nicolaus & Company, UBS Financial Services, Oppenheimer, Charles Schwab, Wells Fargo Advisors, Ameriprise Financial Services, Raymond James Financial Services, ProEquities, Securities America, National Securities Corp., and many others.
If you invested with the AlphaBridge Fixed Income Master Fund, AlphaBridge Fixed Income Fund, or the AlphaBridge Fixed Income Partners, LP, please Contact Us at 720-599-3505 for a free evaluation of your case.
Click to view: AlphaBridge SEC Comp
Click to view: Evans SEC Comp