The FBI has raided investment manager Fairhills Capital.
While it remains unclear what government agents were looking for when they showed up at the firm’s headquarters a few days before Thanksgiving, the investigation adds to a list of recent troubles for the White Plains, N.Y., operation.
In October, Fairhills terminated its status as an SEC-registered investment advisor, and is rumored to have dismissed a number of executives in recent weeks. The firm apparently is in debt to several service providers and lawyers. In its last SEC filing, Fairhills reported having just $25 million of assets under management.
What’s more, the SEC filed a civil lawsuit against Fairhills in August accusing the outfit of improperly pocketing more than $10 million by buying penny stocks and then selling them to investors without submitting required registration statements. That complaint, lodged with the U.S. District Court in New York, also names Fairhills founder Ed Bronson and an equity-finance company he owns called E-Lionheart Associates as defendants.
Fairhills formed in 2002 to manage money for the family of Bronson, a former telecommunications entrepreneur. Bronson began repositioning the firm as a hedge fund manager in early 2012, opening its investment-management services to outside backers.
12/07/2012 14 ENDORSED LETTER addressed to Judge Kenneth M. Karas from Ashley Baynham dated 11/29/2012 re: In sum, the Defendants expect to argue at the pre-motion conference that the issues presented by the SEC's Complaint are purely legal and that, therefore, a motion to dismiss would best resolve this matter. ENDORSEMENT: The Clerk of the Court is respectfully requested to docket this letter. SO ORDERED. (Signed by Judge Kenneth M. Karas on 12/4/2012) (mml) (Entered: 12/07/2012)
12/07/2012 13 ENDORSED LETTER addressed to Judge Kenneth M. Karas from Kevin P. McGrath re: Accordingly, any motion to dismiss the Complaint on the grounds set forth in the Defendants' letter should be denied. ENDORSEMENT: The Court will hold a pre-motion conference on January 8, 2013, at 11:30. SO ORDERED. (Pre-Motion Conference set for 1/8/2013 at 11:30 AM before Judge Kenneth M. Karas.) (Signed by Judge Kenneth M. Karas on 12/4/2012) (mml) (Entered: 12/07/2012)
U.S. District Court Southern District of New York (White Plains)
CIVIL DOCKET FOR CASE #: 7:12-cv-06421-KMK
Securities and Exchange Commission v. Bronson et al Assigned to: Judge Kenneth M. Karas Cause: 15:77 Securities Fraud Date Filed: 08/22/2012 Jury Demand: None
Nature of Suit: 850 Securities/Commodities Jurisdiction: U.S. Government Plaintiff
Plaintiff Securities and Exchange Commission represented by Andrew Matthew Calamari Securities & Exchange Commission (3 WFC) 3 World Financial Center, Room 400 New York, NY 10281 (212) 336-0042 Fax: 212-336-1323 Email: calamaria@sec.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kevin Patrick McGrath Securities and Exchange Commission(NYC) 3 World Financial Center, Suite 400 New York, NY 10281 (212) 336-1100 Fax: (212) 336-1322 Email: mcgrathk@sec.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Wendy Beth Tepperman U.S. Securities and Exchange Commission( 3 World Financial) Three World Financial Center New York, NY 10281 (212) 336-0176 Fax: (212) 336-1320 Email: teppermanw@sec.gov ATTORNEY TO BE NOTICED
William Edwards Securities & Exchange Commission (3 WFC) 3 World Financial Center, Room 400 New York, NY 10281 (212)-336-0953 Fax: (212)-336-1322 Email: edwardsw@sec.gov ATTORNEY TO BE NOTICED
V. Defendant Edward Bronson
Defendant E-Lionheart Associates, LLC doing business as Fairhills Capital
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