|
An
SEC statement said Gray Financial Group Inc steered public
pension fund clients into an investment fund that did not comply
with state law and collected more than $1.7 million as a result.
The group, its founder and president, Laurence Gray, and
co-Chief Executive Officer Robert Hubbard IV breached their
responsibilities to act in the best interest of the pension
funds by recommending investments in an alternative fund called
GrayCo Alternative Partners II LP.
"The claims and arguments in the SEC’s filing today are without
merit," said Terry Weiss, a lawyer at Greenberg Traurig LLP in
Atlanta, who represents the firm, Gray and Hubbard.
The SEC said the investments violated Georgia law because they
did not have at least four other investors and did not have a
minimum of $100 million in assets.
In addition, a Georgia public pension fund’s investment is
limited to no more than 20 percent of the capital in an
alternative fund, but two of the pension funds’ investments
exceeded the limit, according to the SEC.
The firm and Gray made misrepresentations when asked if the
investments complied with the law and about the number and
identity of prior investors, the statement said.
Gray Financial, which has said it has been under investigation
since at least August 2013, manages about $11 billion in assets.
Last year, Gray received notices that charges would be imminent.
In February, the firm filed a lawsuit against the SEC
challenging its use of in-house judges. That case is still
pending.
"The SEC is once again bringing its charges in an
unconstitutional and home-cooked administrative proceeding
rather than trying a case before an impartial U.S. district
court and a jury of one’s peers," Weiss said on Thursday. Gray
will "vigorously defend itself" in both proceedings, he added.
(Additional reporting by Suzanne Barlyn; Writing by Bill Trott;
Editing by Susan Heavey and Andre Grenon)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
