SEC recommends charges against Aletheia, issues Wells notice
By Randy Diamond | November 21, 2012 3:44 pm
The SEC is recommending that fraud charges be brought against money manager Aletheia Research and Management, an attorney for the regulatory agency said Wednesday.
Sources say the SEC investigation concerns accusations of improper trading practices by Peter Eichler Jr., Aletheia co-founder, CEO, chairman and chief investment officer.
Aletheia management was sent a Wells notice on Nov. 14 informing it that the agency’s enforcement staff plans to ask the full commission to approve the filing of civil charges of fraud and violations of federal disclosure and internal control rules, SEC attorney Gary Leung said at a hearing in U.S. Bankruptcy Court in Los Angeles. Aletheia sought Chapter 11 bankruptcy protection on Nov. 11.
Mr. Leung did not provide specifics but said the changes involve the company’s current management and that if charges are filed the SEC would seek disgorgement of related gains as well as civil penalties.
Mr. Eichler did not return phone calls.
The Wells notice offers targeted firms an opportunity to respond to charges before formal proceedings begin. Under federal rules, the five-member SEC must approve all filings of civil charges. The commission takes those actions in closed session.
The firm paid a $200,000 penalty, and Mr. Eichler and co-founder Roger Peikin each paid $100,000 to settle charges in May 2011 that they failed to let institutional clients know that the SEC found deficiencies in the company’s record keeping.