Investment Adviser Accused of Defrauding CalPERS
The Securities and Exchange Commission (SEC) charged Umesh Tandon with lying about the amount of money managed by the firm.
The agency explained that institutional investors such as CalPERS often use assets under management (AUM) as a metric to screen prospective investment advisers soliciting their business. An SEC investigation revealed that while pitching Simran’s services, Umesh Tandon falsely certified to CalPERS that his firm satisfied its minimum AUM requirements.
After fraudulently obtaining the business from CalPERS, Tandon also falsely inflated Simran’s AUM in communications with other potential clients with whom he touted his firm’s relationship with CalPERS. Tandon also fraudulently reported an inflated AUM in filings with the SEC, and he later attempted to mislead SEC examiners during a routine examination of Simran.
“Tandon deliberately undermined the CalPERS screening process by grossly misrepresenting his firm’s purported assets under management,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office. “To make matters worse, he then used his association with CalPERS to lure other public institutional investors under false pretenses.”Tandon agreed to settle the SEC's fraud charges.
According to the SEC's order instituting settled administrative proceedings against Tandon, he represented to CalPERS in May 2008 that Simran met explicit AUM requirements and managed at least $200 million as of December 31, 2007. In fact, Simran managed approximately only $80 million at that time.
Tandon touted Simran's relationship with CalPERS to other prospective clients from 2008 to 2011, and instructed other Simran employees to do the same. On more than a dozen occasions, Tandon and Simran employees falsely inflated the firm's AUM in communications with employee retirement systems and other prospective clients. Tandon and Simran also overstated the AUM in at least four of the firm's Form ADVs filed with the SEC.
In February 2012, Simran withdrew its SEC registration as an investment adviser and has since ceased operations.
Tandon neither admitted nor denied the findings, and agreed to be barred from the securities industry and pay disgorgement of $20,018, prejudgment interest of $1,680, and a penalty of $100,000.