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(Article from Registered Funds Regulatory Update, July 2023

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The U.S. District Court for the Southern District of New York recently entered final consent judgments against Ashish Dole and Amin Majidi, a former trader and former portfolio manager, respectively, at now-defunct registered investment adviser Premium Point Investments L.P., for violating, among other things, the insider trading and antifraud provisions of the federal securities law. The SEC’s Complaint alleged that, from at least September 2015 through March 2016, Premium Point entered into a secret deal where in exchange for sending trades to a broker-dealer, it received inflated broker quotes on securities in private funds managed by Premium Point. Premium Point also allegedly utilized “imputed” mid-point valuations, which were applied to further inflate the value of the securities involved. This arrangement allegedly led to Premium Point materially overstating the funds’ reported NAVs by more than $100 million and reporting inflated month-end and annual performance for its funds to existing and potential investors. The arrangement also hid the funds’ poor performance to deter redemptions and allowed Premium Point to receive excess management and performance fees. The Complaint charged Dole and Majidi with insider trading violations under the Exchange Act as well as with aiding and abetting violations of the anti-fraud provisions under the Advisers Act. Previously, the SEC charged Premium Point, along with Majidi, Anilesh Ahuja, Premium Point’s CEO and CIO, and another trader, with fraud in 2018 and later amended its Compliant to add Dole as a defendant. In 2022, the SEC obtained a final judgment on consent against Ahuja from violating the antifraud and other provisions of the federal securities laws and ordered Ahuja to pay a civil penalty of $450,000. Ahuja was also permanently barred from the industry. Final Judgment as to Defendant Ashish Dole (Apr. 11, 2023), available at: https://www.sec.gov/litigation/litreleases/2023/judg25698-dole.pdf. Final Judgment as to Defendant Amin Majidi (Apr. 11, 2023), available at: https://www.sec.gov/litigation/litreleases/2023/judg25698-majidi.pdf.