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Alternative Market Briefing

SEC charges Northern California fund manager in $60 million scheme

Friday, May 25, 2012

Bailey McCann, Opalesque New York: John A. Geringer a Northern California fund manager was charged by the Securities and Exchange Commission (SEC) with running a $60 million investment fund like a Ponzi scheme and defrauding investors by touting imaginary trading profits instead of reporting the actual trading losses he incurred. According to the complaint, the SEC alleges that Geringer's GLR Growth Fund, used false and misleading marketing materials to lure investors into believing that the fund was earning double-digit annual returns by investing 75 percent of its assets in investments tied to major stock indices. In reality, Geringer’s trading generated consistent losses and he eventually stopped trading entirely.

Geringer initially paid out false returns to original investors with the money from new investments. He also sent investors periodic account statements showing fictitious growth in their investments. According to the SEC’s complaint filed in federal court in San Jose, Geringer raised more than $60 million since 2005, mostly from investors in the Santa Cruz area.

The funds marketing materials claimed returns for years before the fund even existed. The fund was also heavily invested in illiquid investments involving two private technology companies - these investments were not disclosed to investors.

Geringer further lied to investors on account statements ......................

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