U.S. securities regulators charged a former private equity fund manager at Oppenheimer Holdings Inc's Oppenheimer & Co on Tuesday with misleading investors about the valuation and performance of some funds.
The Securities and Exchange Commission claimed that Brian Williamson, 42, disseminated quarterly reports and marketing materials that essentially overstated the value of Oppenheimer's fund holdings and performance figures.
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The company earlier this year agreed to settle related charges with the SEC and pay $2.8 million.
At that time, the company also paid an additional penalty of $132,421 to settle related charges filed by the Massachusetts Attorney General.
Williamson, however, is fighting the charges. Absent a settlement in the future, the case will go before an SEC administrative law judge.
"We are deeply disappointed with the SEC's decision to bring an enforcement action in this matter. In its zeal to pursue cases in the private equity space, the SEC has alleged fraud where none exists," said Dechert LLP's Andrew J. Levander, who along with Cheryl A. Krause is representing Williamson.
"Mr. Williamson will vigorously defend against these charges and looks forward to vindicating his good name and reputation in the industry."
According to the SEC's complaint, Williamson made "material false and misleading statements and omissions" to investors about the valuation of the Oppenheimer Global Resource Private Equity Fund I, L.P., a fund of private equity funds he managed, from September 2009 through June 2010.
The SEC said he led investors to believe the performance was based on the underlying managers' estimated value. In fact, the SEC claims, the value of its single-largest holding was really based on Williamson's own "materially higher valuation."
In addition, the SEC claims that Williamson sent out marketing materials reporting an internal rate of return that failed to deduct certain fees and expenses.
That in turn made the fund's performance appear better.
"Williamson improperly lured investors to the private equity fund he managed by providing false and misleading information about the fund's performance," said Andrew Ceresney, the co-director of the SEC's enforcement division.
Williamson's lawyers dispute these claims, saying that the asset at the heart of the SEC's case now has a net asset value which exceeds their client's earlier valuation.
In addition, Levander said the fund "already reflects an approximate 61 percent gain in the asset's local currency and an approximate 28 percent gain, converting to U.S. dollars," for the fund's investors.
Williamson worked with Oppenheimer from 2005 through 2011, according to the SEC. He marketed the fund to pensions, foundations, endowments and high-net worth individuals.
From at least January 2012 to the present, Williamson has been the sole owner and managing director of ROC Resources LLC (ROC), an investment adviser that works with the Oppenheimer Global Resource Private Equity Fund, the SEC complaint said.
As ROC's managing director, Williamson remains primarily responsible for managing OGR, the SEC said.
(Reporting by Sarah N. Lynch; Editing by Gerald E. McCormick and Andrew Hay)