The U.S. Securities and Exchange Commission has frozen the assets of Toronto-based money manager Weizhen Tang, who is already facing allegations from the Ontario Securities Commission.

The SEC said Monday that it has charged Tang and a hedge fund that he controls, alleging that he raised between US$50 million and US$75 million for the Oversea Chinese Fund Limited Partnership from more than 200 investors, and has operated a Ponzi scheme with the hedge fund since at least 2006. It also alleges that Tang told investors in February that in an effort to conceal substantial trading losses and attract new investors to the fund, he posted false profits on investors’ account statements and used funds from new investors to return principal and pay out at least US$8 million in “fake” profits to other investors.

None of these allegations have been proven.

On March 17, the OSC issued a cease trading order of its own against Tang, Oversea Chinese Fund LP, Weizhen Tang and Associates Inc. and Weizhen Tang Corp. A hearing in the Ontario case has been put off until Sept. 9, and nothing has been proven in that jurisdiction either.

The SEC said that its complaint, filed in federal court in Dallas, also charged Plano, Texas-based investment adviser WinWin Capital Management LLC as a defendant, and named two other Tang entities as relief defendants: WinWin Capital Partners LP, and Bluejay Investment LLC (d/b/a Vintage International Investment LLC). In granting the SEC’s request for emergency relief for investors, U.S. District Judge Jane Boyle entered a temporary restraining order, froze the defendants’ assets, and appointed a receiver to marshal assets.

“This case represents another unfortunate example of a money manager who violated investors’ trust,” said Rose Romero, director of the SEC’s Fort Worth Regional Office. “The SEC will act aggressively to freeze the assets of such wrongdoers to the extent possible for investors.”

In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

IE