The Securities and Exchange Commission (SEC) has announced an enforcement action against Theorem Fund Services LLC (TFS), a fund administrator based in Boca Raton, Florida. The regulator claims that the respondendent failed to act on warning signs related to fraud committed against a private fund and its investors.
As per the SEC’s statement, TFS provided administrative services to a fund managed by EIA All Weather Alpha Fund Partners and Andrew M. Middlebrooks. The SEC accused both of fraud in May 2022. The alleged scheme involved misappropriating and misusing investors’ funds over five years.
In 2020, TFS had been named a “premier cryptocurrency fund administrator” by Blox, a cryptocurrency accounting and tracking firm.
FTS Mislead Investors Over the Value of Investments
During TFS’s involvement with the fund, significant losses occurred due to trading activities by EIA and Middlebrooks. However, at the direction of these individuals, TFS reputedly calculated the Net Asset Value without acknowledging the losses.
TFS then allegedly sent investors misleading account statements, overstating the value of their investments.
What is TradFi? Learn more about the definition of “traditional finance”: TradFi Explained: Exploring Key Elements of Traditional Finance
“Fund administrators are important gatekeepers in the private fund space,” said Andrew Dean, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a statement. He continued:
“Here, TFS failed to live up to its gatekeeper responsibilities and distributed inaccurate account statements to investors despite clear r
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Author: Josh Adams
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