SEC secures Founding Partners asset freeze

24 April 2009

The US Securities and Exchange Commission (SEC) has secured an emergency asset freeze and the appointment of a receiver over a Florida-based investment adviser charged with misrepresenting the nature of $550 million worth of investments.

William L Gunlicks and his firm, Founding Partners Management, are alleged to have defrauded investors by claiming that their primary fund had loaned money to two companies - Sun Capital and Sun Capital Healthcare - to purchase primarily short-term, highly liquid account receivables that fully secured the loans, the SEC said.

In fact, the regulator contests that the companies had purchased longer-term account receivables that were less liquid and much riskier in nature.

Mr Gunlicks and Founding Partners are also accused of soliciting new investors for their primary fund without informing potential investors that it was facing "significant redemption requests".

David Nelson, director of the SEC's Miami regional office, said: "Founding Partners and [Mr] Gunlicks placed unsuspecting investors' assets in jeopardy through their fraudulent conduct."

The SEC is continuing its investigation into the firm.

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