Sales of Praetorian Global Fund
McCabe Rabin, P.A. Retained to Represent Houston Investor In Connection With The Praetorian Global Fund
The law office of McCabe Rabin, P.A. has been retained to represent a Houston-area investor in connection with losses he suffered in the Praetorian Global Fund (“Praetorian). Securities rules and regulations require brokerage firms to monitor their employee’s activities to ensure they do not engage in a practice known as “selling away.” Selling away is when a broker solicits investments in products not held or offered by the brokerage firm. In the case of Praetorian, a broker allegedly solicited investments in the fund, despite the fact that the fund was not offered by his firm and the investors did not maintain accounts at the firm..
According to a complaint against the principals of the Praetorian Global Fund filed on November 17, 2011 by the Securities and Exchange Commission (SEC), the principals of Praetorian and several others engaged in a scheme to defraud investors across the county. The SEC complaint alleges that the principals and several others used the hedge fund to solicit funds from investors. According to the SEC, prospective investors were led to believe that Praetorian and its affiliated entities owned tens of millions of dollars worth of shares in privately-held companies such as Facebook, Twitter, Zynga, and Groupon that were expected to soon hold initial public offerings (IPOs). According to the purported subscription documents, the pre-IPO shares were held by entities known as “Praetorian G Power VIII, LLC”, “Praetorian G Power IV, LLC,” “The Praetorian Fund, Ltd,” “Praetorian G Power XII, LLC,” and “Praetorian G Power VI, LLC,” and others. The SEC complaint asserts that Praetorian and its affiliated entities never owned the pre-IPO shares.
The complaint further alleges that investors were given a false sense of security when they were told that their money would be held by a Florida escrow agent First American Service Transmittals, Inc. (FAST) when in reality; the investors’ money was immediately transferred to the principals’ personal accounts. According to the SEC, investor funds were misappropriated by the Praetorian principals to pay their co-conspirators for their roles in the scheme and to finance private jets, cars, art, jewelry and other lavish expenses.