Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, March 25, 2009

SEC Obtains Asset Freeze Against Chicago-Based Investment Advisor

The SEC announced that on March 24, it obtained emergency relief against investment adviser The Nutmeg Group, LLC, and its principals Randall and David Goulding. In its complaint, filed March 23, the Commission alleges that Nutmeg, which controls and provides investment advice to 13 investment funds, and advises two additional investment funds, has misappropriated client assets, made misrepresentations to its clients, failed to comply with its custodial obligations and failed to keep required books and records.  According to the complaint, Nutmeg and the Gouldings misappropriated over $4 million in client assets by transferring them to third parties.  Based on the Commission's allegations, the United States District Court for the Northern District of Illinois entered an order (TRO) temporarily enjoining Nutmeg from violating provisions of the Investment Advisers Act of 1940 and freezes Nutmeg's assets.

 In addition to the emergency relief already obtained, the SEC is seeking preliminary and permanent injunctions and disgorgement against all defendants, and civil penalties against Nutmeg and Randall Goulding. The lawsuit also seeks disgorgement from relief defendants David Goulding, Inc., David Samuel, LLC, Financial Alchemy, LLC, Philly Financial, LLC, Samuel Wayne and Eric Irrgang. The matter is ongoing.

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