SEC Charges North Carolina-Based Investment Adviser for Misleading Fund Board about Algorithmic Trading Ability

The SEC filed charges against an investment adviser and its former owner for misleading the investment fund's board of directors about the firm's ability to conduct algorithmic currency trading so that the board would approve the firm's contract to manage the fund. The SEC alleged that Chariot Advisors LLC and Elliott L. Shifman misled the fund's board about the nature, extent, and quality of services that the firm could provide by touting the competitive benefits of algorithmic trading in two presentations before the board. Contrary to what Shifman told the directors, Chariot Advisors did not devise or otherwise possess any algorithms capable of engaging in the currency trading that Shifman described. After the fund was launched, Chariot Advisors did not use an algorithm model to perform the fund's currency trading as represented to the board, but instead hired an individual trader who was allowed to use personal discretion, not an algorithm, on trade selection and execution.

See: SEC Complaint; SEC Press Release.