Litigation Releases (Black Dragon Capital, LLC, et al.)

U.S. Securities and Exchange Commission
Litigation Release No. 26095 / September 3, 2024

Securities and Exchange Commission v. Black Dragon Capital, LLC, et al.

, No. 9:24-cv-81067 (S.D. Fla. filed Sept. 3, 2024)

SEC Charges Boca Raton, Florida Private Equity Advisers with Marketing Rule and Registration Violations

The Securities and Exchange Commission today charged Black Dragon Capital, LLC ("Black Dragon Capital"), Black Dragon Capital Investment Management, LLC a/k/a Black Dragon Capital Investment Management, Inc. ("Black Dragon CIM") (collectively, "Black Dragon Entities"), advisers to private funds, and their CEO, Louis Hernandez, Jr. ("Hernandez"), alleging they violated the Investment Advisers Act of 1940 ("Advisers Act").

The SEC's complaint alleges that from at least December 2021 to March 2024, the Black Dragon Entities and Hernandez improperly failed to register as investment advisers with the Commission.

The complaint further alleges that the Black Dragon Entities and Hernandez violated the Commission's Marketing Rule through their use of certain performance data on their website, provided misleading performance information in Black Dragon CIM's marketing materials, and failed to maintain certain books and records, among other violations.

The SEC's complaint, filed in U.S. District Court for the Southern District of Florida, charges the Black Dragon Entities and Hernandez with violating Section 203(a), 204, and 206(4) of the Advisers Act and Rules 204(b)-1(a), 206(4)-1(a)(6), and 206(4)-8, thereunder. The complaint also alleges Black Dragon Capital and Black Dragon CIM violated Sections 204(a), 204A, and 206(4) of the Advisers Act and Rules 204-2(a)(16), 204A-1, and 206(4)-7, thereunder, and that Black Dragon CIM and Hernandez violated Section 206(4) of the Advisers Act and Rule 206(4)-8, thereunder.

The Black Dragon Entities and Hernandez have consented, without admitting or denying the Commission's allegations and subject to court approval, to be permanently enjoined from violating the charged provisions of the federal securities laws and have agreed to pay civil penalties.

The SEC's investigation was conducted by Najwa-Monique Sharpe with assistance from Russell R. O'Brien in the Miami Regional Office and supervised by Thierry Olivier Desmet and Glenn S. Gordon. The team was assisted by Holly H. Miller, Adele Kittredge Murray, Beth Clark, and Neil Lombardo in the Division of Investment Management, and Daniel M. Faigus in the Division of Examinations' Private Funds Unit.

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