Paul Greenwood and Stephen Walsh, co-operators of a WG Trading Investors commodity pool and shareholders of Westridge Capital Management, today were arrested and charged with operating a fraudulent scheme that misappropriated at least $554 million of institutional investor capital since 1996.
Messrs. Greenwood and Walsh face federal counts of conspiracy, securities fraud and wire fraud, according to a news release from the U.S. Attorneys office in New York.
The two men are also shareholders in Westridge Capital Management, an enhanced index fund manager that completes transactions through affiliated commodities pools for institutional investors.
The U.S. Attorneys office said Messrs. Greenwood and Walsh ran a fraudulent commodities trading and investment advisory scheme through WG Trading Investors in which institutional assets that were to be managed in an enhanced index strategy were misappropriated.
Also, the Commodity Futures Trading Commission and the SEC today filed civil complaints against the two men, alleging fraud and seeking to freeze assets of Messrs. Greenwood and Walsh. Others named in the civil complaints include Westridge Capital Management, WG Trading Investors and other related entities, and family members of Messrs. Greenwood and Walsh.
On Tuesday, the National Futures Association took emergency enforcement action against Messrs. Greenwood and Walsh. According to NFA documents, 16 institutional investors were invested in the affected Westridge Capital Management Enhanced Funds.
Attorneys for Messrs. Walsh and Greenwood and Westridge Capital Management did not return calls by press time seeking comment.