By Jaclyn Jaeger2021-05-28T18:53:00+01:00
The Securities and Exchange Commission (SEC) on Thursday filed a civil action against investment management firm LJM and two of its portfolio managers for fraudulently misleading investors about the company’s risk management practices and the level of risk in its portfolios.
The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties from LJM Funds Management and LJM Partners (collectively, LJM) and portfolio managers Anthony Caine and Anish Parvataneni. Caine is also the owner and founder of LJM.
According to the SEC’s complaint, LJM adopted a short volatility trading strategy that “carried risks that were remote but extreme.” To ease investor concerns about the potential for losses, the company, Caine, and Parvataneni “crafted an effective, yet false, marketing narrative which touted their purported ‘risk centric’ approach to investing and avowed their ‘managing principle’ was to maintain a consistent risk profile and consistent risk levels, even if it meant lower returns,” the complaint states.