The Securities and Exchange Commission has filed a settled civil action in the US District Court for the Northern District of California against Gary R Marks.
The Commission’s complaint alleged that Marks managed and recommended various fund of funds hedge funds through Sky Bell Asset Management (an investment adviser formerly registered with the Commission), including the Agile Sky Alliance Fund that was co-managed with the Agile Group, PipeLine Investors, Night Watch Partners, and Sky Bell Offshore Partners (collectively Sky Bell Hedge Funds).
The Commission’s complaint alleged that between at least 2005 and September 2007, Marks negligently misrepresented the level of correlation and diversification among certain Sky Bell Hedge Funds.
Furthermore, the complaint alleged that between at least 2005 and 2008, Marks also: a) made unsuitable investment recommendations to certain advisory clients to invest most of their investment portfolio in Sky Bell Hedge Funds, b) negligently failed to disclose that PipeLine Investors invested significantly in a purported subadviser’s fund, and c) negligently provided misleading information to certain investors about the liquidity problems at the Agile Sky Alliance Fund.
Without admitting or denying the allegations in the Commission’s complaint, Marks consented to the entry of a proposed Final Judgment enjoining him from future violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 promulgated thereunder, and Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.
The proposed final judgment also orders Marks to pay disgorgement of USD321,702, a penalty of USD100,000, and prejudgment interest. The proposed settlement is subject to the approval of the district court.
