MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Wednesday, October 19, 2011 SEC Sues Fund Firm Sunk by a Lazy Investment Anytime a mutual fund advisor arranges financing from something called "Lazy Deuce Capital" the following news is not likely to be good. And an SEC lawsuit against Dblaine Capital, advisor to the Dblaine Fund is proving the point. Yesterday the SEC filed suit against David Welliver, the founder of Minneapolis-based Dblaine Capital. The Star-Tribune reports that the SEC claims that Dblaine Capital entered the Dblaine Fund into an improper agreement with itself and Welliver and that the advisor improperly invested the fund's assets into an improper "alternative investment." The fund's objective was growth and income. The fund's board liquidated the fund on August 11. At that time it had 80 shareholders and net assets of just $54,000. Earlier, Welliver had tried to raise $200,000 to merge the fund with another. Yet, the SEC suit claims that Welliver spent $500,000 on personal items, including a car, vacation and other items, including back taxes. Dblaine Capital claimed just $500,000 in total AUM last year and earned less than $7,000 in fees. Still, Welliver paid himself a six figure salary, claims the SEC. The fund's troubles increased when Welliver borrowed $4 million from Lazy Deuce to complete a merger with another fund. That merger pushed the fund's assets to $9 million. However, those assets were invested with a private placement from commercial lender Semita Partners. It turns out that Semita Partners consisted of principals of Lazy Deuce who distributed the investment to the lender's partners. Printed from: MFWire.com/story.asp?s=38101 Copyright 2011, InvestmentWires, Inc. All Rights Reserved |