In June 2024, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Joshua Charles Avikzer Goltry and his company JAG Capital Advisors, LLC on fraud allegations. The SEC alleges that Goltry and his firm engaged in a fraudulent scheme involving the solicitation of over $3 million from investors for a hedge fund, JAG Cap, LLC (JAG Fund), between 2020 and 2023.
Key Allegations:
- Fraudulent Misrepresentation of Fund Performance: Goltry misled investors by providing false promotional materials, including pitch decks, which claimed that the JAG Fund significantly outperformed major indices such as the Dow, S&P, and Nasdaq. In reality, these performance records were fabricated. Goltry also misrepresented the fund’s performance in direct communications with investors, showing inflated returns and falsified portfolio performance.
- High-Risk and Speculative Trading: Contrary to the claims made in the promotional materials, Goltry engaged in high-risk options trading, resulting in significant losses for the JAG Fund. Between 2021 and 2023, the fund incurred trading losses totaling approximately $1.74 million. Despite these losses, Goltry continued to present the fund as profitable.
- Misappropriation of Investor Funds: Goltry misappropriated over $1.1 million of investor funds for personal use. He used the money to pay for personal expenses, including rent, travel to Hawaii, Las Vegas, and Paris, as well as luxury purchases such as jewelry. This misappropriation was concealed from investors through the falsification of fund documents.
- Falsified Valuation of Investments: The SEC alleges that Goltry manipulated the valuation of certain private investments in the JAG Fund, falsely inflating the value of the fund’s holdings. For instance, he reported to investors that the value of one of the fund’s investments had increased significantly, despite knowing that the valuation was fabricated. This deception allowed him to cover up the fund’s poor performance and trading losses.
- Creation of Fake Invoices and Documents: To conceal the misappropriation and mismanagement, Goltry provided fraudulent invoices and falsified fund documents, including false promissory notes and Bloomberg terminal screenshots, to the fund administrator and investors.
Legal Charges:
The SEC’s complaint alleges that Goltry and JAG Capital Advisors violated several key provisions of U.S. securities laws, including:
- Section 17(a) of the Securities Act of 1933 (fraud in the offer or sale of securities).
- Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (fraud in connection with the purchase or sale of securities).
- Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (fraud by an investment adviser).
SEC’s Remedies:
The SEC is seeking a variety of remedies, including:
- Permanent injunctions to prevent Goltry and JAG Advisors from violating federal securities laws in the future.
- Disgorgement of all ill-gotten gains, with prejudgment interest.
- Civil penalties for the fraudulent activities.
- A permanent bar preventing Goltry from serving as an officer or director of any publicly traded company.
Conclusion:
The SEC’s case against Joshua Goltry and JAG Capital Advisors underscores the importance of transparency and integrity in investment management. This action is a reminder to investors to carefully evaluate the claims made by fund managers and ensure that their investments are managed ethically and within the bounds of the law. The outcome of this case will likely result in significant penalties and prohibitions for Goltry and his firm.
About Michael Rasmussen
Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.
Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include:
- Investment Adviser Compliance Essential for Chief Compliance Officers
- Foundations of Investment Adviser Compliance
- What is a “Security”?
- Investment Adviser Marketing Rule
- Regulation A – Exemption from Registration
- Regulation Crowdfunding – Exemption from Registration
- Regulation D – Exemption from Registration
Michael can also be found on LinkedIn.
Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.