Thursday, September 8, 2011
The SEC filed a civil injunctive action in federal district court in Massachusetts against registered investment adviser EagleEye Asset Management, LLC, and its sole principal, Jeffrey A. Liskov, in connection their fraudulent conduct toward advisory clients. According to the SEC, between at least April 2008 and August 2010, Liskov made material misrepresentations to nearly a dozen advisory clients to induce them to liquidate investments in securities and invest the proceeds in foreign currency exchange (“forex”) trading. These investments, which were not suitable for older clients with conservative investment goals, resulted in steep losses for clients, totaling nearly $4 million, but EagleEye and Liskov came away with over $300,000 in performance fees on these investments alone, in addition to other management fees they collected from clients.
According to the Commission’s complaint, Liskov’s material misrepresentations to clients concerned the nature of forex investments, the risks involved, and his expertise and track record in forex trading. As to some clients, Liskov did not explain what forex trading was at all. As to other clients, Liskov downplayed the risks of forex investments. Liskov also falsely told several clients that he had had prior success in forex trading, when in fact he had lost substantial sums of his own or other clients’ money in forex trading when he made such statements.
The Commission seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest thereon, and the imposition of a monetary penalty against both EagleEye and Liskov.
The Commodity Futures Trading Commission and Secretary of the Commonwealth of Massachusetts William F. Galvin also filed related cases.