Social Media’s Hedge Fund Guru Charged With Fraud

The SEC claims Anthony Davian used investor funds as his “personal piggy bank”

By Zac Warren

Inside Counsel, August 16, 2013

Not even a large Twitter presence could keep Anthony Davian safe from the SEC.

The SEC filed Tuesday to charge the Ohio-based hedge fund manager with fraud. The SEC filing claims Davian “misappropriated more than $1 million from investors in funds managed by his company.”

Davian had raised more than $1.5 million from investors since 2011 after touting high returns on his investments. But the SEC says those profits never actually existed and were merely “figments of Davian’s imagination.” Instead, the filing says, his company Davian Capital Advisors was “nothing more than Davian’s personal piggy bank.”

In one example, says the SEC, an investor wired Davian $100,400 into a bank account that had previously contained less than $13. Davian then transferred $65,000 of those funds to another account to buy himself an Audi Q7.

The court order has frozen at least 24 bank accounts Davian operated. According to the filing, “There is good cause to believe that unless frozen by order of this court, assets that otherwise could have been subject to an order of disgorgement … will be dissipated, concealed, or transferred from the jurisdiction of this court.”

Known on Twitter as @hedgieguy, Davian had become popular thanks to his large social media presence, including a YouTube channel and a newsletter. The Southern Investigative Reporting Foundation reported last month that Davian was under investigation and had attempted suicide.

For more on the Davian story, check out Business Insider and Crain’s Cleveland.

And for more hedge funds gone bad, read up on these InsideCounsel stories:

SAC trader’s lawyers seek access to witnesses

Former Green Mountain employee and friend accused of insider trading

U.S. indicts SAC Capital on fraud charges

SEC charges hedge-fund manager Steven A. Cohen

Question:  How might this case affect the content of regulations regarding crowdfunding?  They reportedly may be issued by SEC in 2014.



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