Bringing you live news and features since 2006 

SEC obtains emergency relief against St Louis-based private investment funds over fraud charges


The Securities and Exchange Commission has obtained an emergency court order to freeze the assets of St Louis-based private investment funds and management firms after suing them and their principal for a scheme to defraud investors.

The SEC alleges that Burton Douglas Morriss diverted more than USD9 million of investors’ money to himself without their knowledge or consent, and he mischaracterised the transfers as ‘loans” in his companies’ books. Morriss misused the money for alimony payments, interest on personal loans, and costly vacations including an African safari.

“Morriss attempted to hide his illegal transfers of investor funds by calling them ‘loans’ when in reality he had no intention of paying back the money and instead went on a spending spree,” says Eric I Bustillo, Director of the SEC’s Miami Regional Office. “It is fraud, pure and simple.”

The SEC’s complaint filed Tuesday in federal court in St Louis charges Morriss, his two private investment funds MIC VII LLC and Acartha Technology Partners LP, and his management firms, Gryphon Investments III LLC and Acartha Group LLC. Morriss Holdings LLC, an entity to which Morriss transferred some of the investor funds, is named as a relief defendant.

The SEC alleges that Morriss raised USD88 million from investors who were told their funds would be invested in emerging financial services and technology companies. Instead, the SEC said Morriss transferred millions to himself and Morriss Holdings and used them for personal expenses. In an attempt to conceal his scheme, the fraudulent transfers that Morriss made to himself were recorded as “loans” on the books of Morriss’s companies. However, the transfers were never truly loans because Morriss did not intend to repay them. Morriss also recruited new investors for one of his funds without the unanimous consent of existing investors as required, thereby diluting their holdings.

On Tuesday, the Honorable Carol E Jackson granted the SEC’s request for asset freezes, the appointment of a receiver, and other emergency relief to prevent further dissipation of investor assets. The SEC seeks to bar Morriss from serving as a public company officer or director; it also seeks permanent injunctive relief and financial penalties against Morriss and the entity defendants, and disgorgement of all ill-gotten gains from them and relief defendant Morriss Holdings.

The SEC’s investigation was conducted by Brian T James, Trisha D Sindler, and Michelle Lama under the supervision of Chedly C Dumornay in the Miami Regional Office. Adam Schwartz and Robert K Levenson will litigate the case.

Latest News

Invesco’s Paul Syms, Head of EMEA ETF Fixed Income and Commodity Product Management, has commented on the gold price, saying:..
Everysk, a provider of customisable, no-code, low-code intelligent automation solutions, has been chosen as a strategic partner of Dynamic Beta..
Rize ETF has listed its new Rize Circular Economy Enablers UCITS ETF (CYCL) on the London Stock Exchange (LSE) and..
DWS has launched a new Xtrackers ETF based on European Nordic equity markets, aligned with the goals of the 2015..

Related Articles

Stephanie Miller Pierce, BNY Mellon
The three-year anniversary of BNY Mellon Investment Management’s launch of ETFs was marked by the quarter one growth of 172...
South Korea Flag
The overall trend in retail subscriptions to mutual funds in Korea is shifting gradually toward ETFs, as exchange-traded offerings have...
“The beauty of ETFs is that you can have effectively a rules-based strategy at low cost” says Laurent Kssis, head...
Henry Timmons, RBA
Henry Timmons, director of ETFs and Michael Contopoulos, director of fixed income at Richard Bernstein Advisors are on a mission...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by