Two former hedge fund managers in Chicago drained client accounts of at least $147,000 before liquidating them earlier this year, federal regulators charged Wednesday.
The Securities and Exchange Commission said Norman Goldstein and Laurie Gatherum, a husband-and-wife team that owns GEI Financial Services, siphoned the money by charging excessive fees and capital withdrawals. The SEC said they managed investor funds even though the state of Illinois revoked their right to do so in 2011 after repeated rule violations.
"For years, the defendants have demonstrated a complete disregard toward the securities laws, their clients and the state of Illinois," the SEC complaint said. "They long ago abandoned their fiduciary responsibilities towards their clients."
Goldstein, 68, and Gatherum, 67, are Chicago residents. They could not be reached and their attorney did not return a call Wednesday.
A phone number for their firm, which had an office at 330 N. Wabash, was disconnected.
The SEC said GEI liquidated its funds after investors became aware it no longer was licensed to sell securities in Illinois and redeemed their holdings.
Some $3.6 million was returned to investors, but Goldstein and Gatherum still owe the funds $147,000 from the excessive charges, the SEC said. Its complaint seeks fines, restitutions and orders banning them from further regulatory violations.
Separately, federal officials Wednesday filed civil and criminal charges against a San Francisco hedge fund manager, Hausmann-Alain Banet and his firm Lion Capital Management. He is accused of stealing more than $500,000 from a retired schoolteacher who thought she was investing her retirement savings with Banet.