Litigation Releases (Premium Point Investments LP et al.)

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26054 / July 24, 2024

Securities and Exchange Commission v. Premium Point Investments LP et al., Civil Action No. 1:18-cv-04145 (S.D.N.Y. filed July 8, 2024)

SEC Obtains Judgment Against Former Broker Related to Hedge Fund Valuation Scheme

On July 8, 2024, the U.S. District Court for the Southern District of New York entered a final consent judgment against Frank Dinucci, Jr., a broker at formerly-registered New York-based broker-dealer AOC Securities LLC, permanently enjoining him from violating the antifraud and other provisions of the federal securities laws.

According to the SEC's complaint, as part of a secret deal, Dinucci provided inflated broker quotes to New York-based investment adviser Premium Point Investments LP in exchange for Premium Point sending trades to AOC. This practice, in part, enabled Premium Point to engage in a fraudulent valuation scheme that resulted in the inflation of the value of private funds Premium Point advised by hundreds of millions of dollars from at least September 2015 through March 2016, boosting the value of many of Premium Point's holdings and further exaggerating returns in order to conceal poor fund performance and attract and retain investors.

The SEC's complaint charged Dinucci with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder and Sections 17(a)(1) and (3) of the Securities Act of 1933, as well as with aiding and abetting violations of Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8(a)(2) thereunder.

The SEC previously charged Premium Point, along with Premium Point CEO and chief investment officer Anilesh Ahuja, portfolio manager Amin Majidi, and trader Jeremy Shor with fraud on May 9, 2018, later amending its complaint to add Premium Point trader Ashish Dole and Dinucci as defendants. On September 20, 2022, the SEC obtained final judgments on consent enjoining Premium Point and Ahuja from violating the antifraud and other provisions of the federal securities laws and ordering Ahuja to pay a civil penalty. The SEC obtained final judgments on consent enjoining Majidi and Dole from violating the antifraud and other provisions of the federal securities law on April 11, 2023. On November 7, 2023, the SEC obtained a final judgment on consent enjoining Shor from violating the antifraud and other provisions of the federal securities laws.

The SEC's litigation is led by Assistant Regional Directors Lee Greenwood and Joshua Brodsky and New York Regional Office Co-Regional Trial Counsel Preethi Krishnamurthy. The matter was investigated by the Division of Enforcement's Complex Financial Instruments and Asset Management Units, and is supervised by Osman Nawaz, Chief of the Complex Financial Instruments Unit.