Two Buffalo, N.Y., brokers have received a lifetime ban from the securities industry for lying about a hedge fund they were selling, the Financial Industry Regulatory Authority (FINRA) announced last week.

Timothy S. Dembski and Walter F. Grenda told potential investors that the hedge fund in question, the Prestige Wealth Management Fund LP, was a growth fund that in reality lost 80 percent of its value in the last month it traded.

At the time of the fraud, Dembski and Grenda were employed with Mid Atlantic Capital Corporation in Buffalo. FINRA's investigation found that Dembski and Grenda made material misrepresentations and omissions to lead investors to believe the hedge fund was based on a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund. In fact, the fund was a highly speculative investment, the fund’s chief investment officer had complete control over the investments made, and it was not obligated to follow the computer algorithm, FINRA says.

Dembski and Grenda distributed marketing information saying the chief investment officer worked in the financial services industry for more than 14 years, co-managed a portfolio of more than $500 million and was a vice president of investments for a New York based investment company, all of which were false.

In settling this matter, Dembski and Grenda neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.