An investment scheme that allegedly promised investors high returns by picking through state insurance regulator filings to figure out the stocks Warren Buffett’s Berkshire Hathaway Inc. would be buying, before they were publicly disclosed, was actually a Ponzi scheme, U.S. authorities allege.
According to a grand jury indictment unsealed Wednesday in U.S. District Court for the Southern District of New York, a former hedge fund trader, Vladimir Artamonov, allegedly defrauded investors in a scheme he called “Project Information Arbitrage,” which promised to generate returns by trading ahead of new investments by Berkshire Hathaway.
“Artamonov represented to investors that he could identify Berkshire’s new investments ahead of their public disclosure in filings with the U.S. Securities and Exchange Commission (SEC) by reviewing public insurance company filings made by Berkshire’s affiliates with state regulators,” the indictment said — and then investing in those companies to capitalize on the stock price gains that often follow disclosure of Berkshire’s trades.
Instead of executing that strategy, the indictment alleged Artamonov “primarily invested in risky short-term options in public companies that, for the most part, did not overlap with Berkshire’s investments.”
When early investors began demanding their money back, he allegedly paid returns using money raised from new investors, the indictment charged.
In total, it alleged that between Sept. 2021 and Feb. 2024, Artamonov misappropriated over US$4 million of investors’ money and returned only about US$400,000.
Most of the investors were former classmates at Harvard Business School, which Artamonov graduated from in 2003. He later worked in the financial industry at Greenlight Capital, and as a managing partner of the hedge fund Coastal Investment Management L.P.
“As alleged, Vladimir Artamonov betrayed investors, including friends and former Ivy League classmates, by promising a low-risk, high-return investment strategy, when in fact he gambled away investor money and paid off previous investors to continue his scheme,” U.S. attorney Jay Clayton said in a release.
The indictment charges Artamonov with securities fraud, wire fraud and investment adviser fraud. The New York attorney general’s office previously filed separate civil proceedings in the case.
None of the allegations have been proven, and he is presumed innocent of the criminal charges.