SEC v. ABS Manager, LLC, et al., Case No. 13 CV 0319 PC JMA (S.D. Cal.). On February 20, 2013, the SEC announced fraud charges against George Charles Cody Price. Price raised $18 million for three investment funds through his firm ABS Manager LLC. According to the SEC, Price told investors that their money was safe because it was backed by government-backed bonds that would generate as much as 18 percent per year in profits. In reality, however, Price invested the money in risky collateralized mortgage obligations (“CMOs”). The SEC alleges that his CMO investments did not achieve the promised returns and actually lost money. The SEC also claims that Price hid his true investment performance by giving investors fake monthly account statements. Price also co-hosted a radio show and recommended that listeners invest in one of his funds. He allegedly misappropriated a half-million dollars in the form of purported fees, and grossly inflated the assets under his management to overstate his importance as an investment manager. The defendants are charged with violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act and Rules 206(4)-8(a) thereunder. When the SEC filed the complaint, it also sought a temporary restraining order, asset freeze, receiver, order prohibiting the destruction of documents, and an accounting. The court denied the
requests for emergency relief.
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