U.S. securities regulators on Tuesday charged a small company in Westchester County, New York, that managed billions of dollars in hedge funds and private placements on behalf of Russian oligarch Roman Abramovich, d ‘operate as an unregistered investment advisor.
The Securities and Exchange Commission said in a lawsuit filed in New York federal court that Concord Management and its owner, Michael Matlin, earned tens of millions of dollars in fees for providing investment advice to a person identified only as a “rich old Russian”. official widely believed to have political ties to the Russian Federation.
A person familiar with the matter confirmed that it was Mr. Abramovich, who was governor of the Chukotka region in eastern Russia.
The New York Times reported in March 2022 that Concord, with an office in Tarrytown, New York, had managed dozens of investments for Mr. Abramovich. A few weeks earlier, Russia invaded Ukraine and international authorities began imposing sanctions against Russian oligarchs close to President Vladimir V. Putin. The United States has never imposed sanctions on Mr. Abramovich, unlike Britain and the European Union.
The sanctions forced Mr. Abramovich to sell Chelsea Football Club, the famous London soccer team. Authorities also froze more than $13 billion in assets held by financial institutions in Britain, the Cayman Islands, the island of Jersey and the British Virgin Islands. Some of these assets are believed to be investments Concord made for Mr Abramovich with US financial companies that managed offshore funds.
In June last year, the United States seized two planes believed to belong to Mr Abramovich.
The SEC’s complaint centers on activity that began in 2012, when the regulator said the company and Mr. Matlin, now 59, should have registered as investment advisers. The regulator said that over the next decade the company and Mr Matlin collected $85 million in compensation.
The complaint details allegations that Mr. Matlin and Concord coordinated their investment decisions with companies based in the British Virgin Islands and Jersey, which Mr. Abramovich allegedly controlled. The daisy-chaining of offshore entities was one of the ways Concord kept Mr. Abramovich’s involvement in the background, the SEC said.
Gurbir S. Grewal, director of the SEC’s enforcement division, said in a statement that Concord “impaired the commission’s ability to exercise effective regulatory oversight over the billions its client invested in the UNITED STATES “.
Jon Hammond, a spokesman for Concord and Mr. Matlin, said in a statement: “We are confident that a full and fair review of the applicable law and relevant facts will highlight that Concord Management and Michael Matlin complied with all regulatory and legal requirements. »
Mr. Abramovich’s lawyer did not respond to a request for comment.
The Times reported a little more than a year ago that the SEC’s Boston office had opened an investigation into Concord. The investigation began after some members of Congress pushed to close a regulatory loophole that allowed hedge funds and private equity firms, in some cases, to avoid conducting the same type of anti-money laundering checks. money that banks and mutual funds must regularly carry.
The SEC said that as of January 2022, Concord managed 112 hedge fund and private equity investments valued at $7.2 billion. The regulator said the oligarch was the company’s only client.
The SEC said Mr. Matlin directed Concord employees to begin liquidating investments at a time when Russia was threatening to invade Ukraine. He asked analysts to determine which investments could be quickly bought back from hedge funds or sold to other investors in private transactions, the agency said.