Investors were allegedly defrauded by a private fund advisor that repeatedly put its own interests ahead of its investors, the U.S. Securities and Exchange Commission (SEC) alleges.
In a complaint filed in the U.S. district court for the Southern District of New York, the SEC alleged that, starting in 2021, advisory firm Meyer Global Management LLC and its CEO, Owen Meyer, violated their fiduciary duties to investors by misusing fund assets and misleading investors in the funds.
According to the regulator’s complaint, between 2019 and 2024, the firm raised at least US$18.5 million from investors by selling interests in managed funds that promised exposure to pre-IPO securities in large private companies, such as SpaceX and OpenAI.
However, the SEC alleged that at least US$1.27 million of that money was misappropriated for personal expenses and to make different investments than the ones that investors were promised.
“In one of these schemes, defendants skimmed from proceeds that should have been distributed to client funds and investors, then effectively held investor proceeds hostage unless investors agreed to accept less than they were entitled to receive as a return on their investments and agreed not to sue MGM and Meyer,” the SEC alleged.
In another scheme, the regulator alleged that investor funds were used to provide an undisclosed, interest-free loan, “to support Meyer’s lifestyle, including spending over US$18,000 of fund capital in a single night for his personal entertainment at a strip club.”
Additionally, the regulator alleged that the firm failed to pay a capital call for one of its funds that held shares in SpaceX, ultimately forfeiting the assets held by a fund that had raised US$3 million from investors.
In these various alleged schemes, “MGM and Meyer deceived and defrauded their client funds and investors, put their own interests above the interests of the funds they advised, and failed to exercise reasonable care or act in the best interests of their client funds in breach of their fiduciary duties,” the complaint alleged.
The allegations have not been proven.
The SEC is seeking permanent injunctions, disgorgement and civil penalties against both the firm and Meyer.