Litigation Release No. 25028 / February 10, 2021
Securities and Exchange Commission v. David Hu, Civil Action No. 1:20-cv-05496 (S.D.N.Y. filed July 17, 2020)
On February 1, 2021, Judge Denise L. Cote of the U.S. District Court for the Southern District of New York entered a partial judgment against David Hu, the co-founder and chief investment officer of International Investment Group (IIG), a formerly registered investment adviser, enjoining Hu from violating the antifraud provisions of the federal securities laws. The Commission revoked IIG's registration in November 2019.
According to the SEC's complaint, from October 2013, Hu orchestrated multiple frauds on IIG's investment advisory clients. As alleged, Hu grossly overvalued the assets in IIG's flagship hedge fund, resulting in the fund paying inflated fees to IIG, some of which went to Hu personally. In addition, through IIG, Hu allegedly sold at least $60 million in fake trade finance loans to other investors and used the proceeds to pay the redemption requests of earlier investors and other liabilities. The complaint alleges that Hu deceived IIG clients into purchasing the purported trade finance loans by directing others at IIG to create and provide to the clients fake loan documentation to substantiate the non-existent loans, including fake promissory notes and a forged credit agreement.