SEC v. Prophecy Asset Management, LP

Prophecy Asset Management LP, Jeffrey Spotts, and Brian Kahn allegedly concealed hundreds of millions of dollars of losses from investors while bringing in millions in management and incentive fees. According to the SEC’s complaint, Prophecy Asset Management raised over $500 million between 2014 and 2020 for hedge funds it advised, misleading investors to believe that their investments were protected from loss. As alleged, Prophecy Asset Management, Spotts, and John Hughes, worked with Kahn to deceive the funds’ auditor and administrator through fabricated documents and engaging in a series of sham transactions to cover-up the true financial condition of the funds. According to the complaint, losses in the funds exceeded $350 million. The SEC previously charged Hughes with fraud.

Summary generated from official Securities and Exchange Commission press release