Securities Fraud and Mismanagement

Attorney and Counselor at Law

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The sudden and stunning collapse of Aequitas Capital Management continues to unfold. The alternative investment’s platform is under investigation by both the SEC and Consumer Financial Protection Bureau. Nearly $600 million was bet on a diverse array of subprime lending strategies.

This bet was done with the funds of the Aequitas investors.  It’s unclear how much, if anything, they’ll recover.

Complicit in this matter are the financial advisors recommending this investment.  The investment was reliant upon such financial advisors for funding the investment.  It appears that the due diligence in the investment by some financial advisors, required to be completed by financial advisors, was substantially insufficient.   The financials of Aequitas evidence existing and ongoing financial weakness.

Aequitas suffered a debilitating cash shortage that has forced it to terminate 80 of its 125 workers. It has defaulted on payments due to investors. It has confirmed in letters to customers it is considering bankruptcy filings.

The SEC and the Consumer Financial Protection Bureau have launched separate investigations of the company. Brian Rice and Scott Gillis, two of the company’s six senior partners, resigned in recent weeks. The company’s general counsel just quit. As did Gillis, the CFO.  Gillis was the second Aequitas chief financial officer to depart in less than a year.