SBB prominently displayed the funds’ “monthly fund performance” in its marketing materials for prospective investors to see, the SEC said, but that track record was an illusion based on the SBB team fraudulently manipulating the recorded value of the funds’ investments.
Once the valuation issues were uncovered by SEC exam staff, the defendants took steps to conceal their fraud from investors and SBB's auditor, the agency says. The complaint alleged that when SBB hired an outside valuation firm in 2016, performance for its flagship fund was slashed, and SBB surreptitiously credited investors for the overcharged fees but did not disclose the underlying problem.
The SEC's complaint, filed in the U.S. District Court for the Northern District of Illinois, seeks permanent injunctions and civil penalties against each defendant.