SEC Charges Northern California Investment Adviser in $60 Million Ponzi Scheme

SEC v. GLR Capital Management, LLC, et al., Case No. CV 12-2663 HRL.  Yesterday, the SEC charged John A. Geringer of running a $60 million investment fund like a Ponzi scheme.  Geringer, who managed the GLR Growth Fund, misled investors with false marketing materials claiming that the fund produced returns of between 17 and 25 percent through investments tied to well-known stock indices such as the S&P 500, NASDAQ, and Dow Jones.  He also claimed 25 percent returns for years before the fund even existed.  In reality, to the extent Geringer did any securities trading, he consistently lost money.

To conceal his fraud, Geringer falsified the fund’s brokerage account records and passed the false information along to investors.  In addition, of the money he raised from investors, millions of dollars were used to pay back earlier investors, giving the false appearance of profitability, as in a Ponzi scheme.

The SEC charged Geringer, the fund and two related entities with violating Section 17(a) of the Securities Act, Sections 10(b) and 26 of the Securities Exchange Act and Rule 10b-5 thereunder, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act and Rule 206(4)-8 thereunder.  The SEC seeks financial penalties, disgorgement of ill-gotten gains, and preliminary and permanent injunctions.  Geringer, the fund, and two of the related entities consented to the entry of a preliminary injunction and a freeze on the fund’s bank account.

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