The Securities and Exchange Commission (SEC) has filed a lawsuit against Jeffrey Arsenault, Old Greenwich Capital Advisors, LLC, and OGCP Management Co, LLC.
The relevant complaint was submitted on October 11, 2024, at the Connecticut District Court.
The SEC’s complaint alleges that, after the fall of 2008, Jeffrey Arsenault and the investment fund he founded and managed, Old Greenwich Capital Partners, L.P. (the “OGCP Fund”), faced financial difficulties. The market downturn caused the OGCP Fund to lose value. Arsenault’s partner split from the OGCP Fund and took with him a significant portion of the assets under management. Arsenault’s house was soon in foreclosure.
Thereafter, Arsenault and Old Greenwich Capital Advisors misappropriated money from the OGCP Fund, which Arsenault used to maintain his and his family’s expensive lifestyle in Greenwich, Connecticut and to make unauthorized payments to Old Greenwich Capital Advisors and to his other ventures.
From 2014 to the present, Arsenault, through co-defendants Old Greenwich Capital Advisors and OGCP Management (the investment advisers he owned and controlled), diverted for Defendants’ benefit millions of dollars of investor money he managed from two investment funds, the OGCP Fund and the OGCP Four Seasons Fund, LP. Defendants drained the Funds of nearly all their assets.
To conceal their theft from investors, Defendants fraudulently represented the value of the Funds’ holdings in false account statements and tax documents, including by overstating the interest the OGCP Fund purportedly held in Defendants’ Four Seasons Fund. Defendants tried, in part, to cover up the missing assets caused by their misappropriation by falsely claiming the missing money had been reinvested in the related Four Seasons Fund even after the Four Seasons Fund had ceased to operate.
Defendants knew that the OGCP Fund account statements and related tax documents were false and misleading because they knew they were diverting money away from the Funds and that the resulting Fund balances were inaccurate. Defendants also misled investors into believing losses were attributable to bad investments instead of their own misappropriation.
Through their scheme, Defendants misappropriated more than $4.1 million from the Funds and, ultimately, investors, from October 2014 through the present.
The SEC accuses the defendants of violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and 10b-5(c) thereunder [17 C.F.R. § 340.10b-5(a) and (c)]; and Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 (“Advisers Act”)
The Commission seeks entry of permanent injunctions against the defendants, as well as appropriate civil monetary penalties against the defendants. In addition, the SEC pushes for disgorgement of defendants’ ill-gotten gains.
As to Arsenault, the SEC seeks an officer and director bar pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)].
