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Matthias Knab, Opalesque:

The U.S. Securities and Exchange Commission (SEC) has filed charges against Hedonova LLC and Hedonova Advisors LLC, alleging that the companies engaged in a fraudulent scheme to mislead investors about their operations and financial status. According to the complaint filed in the Central District of California, Hedonova, which presents itself as a mutual fund for alternative assets, raised substantial amounts of money from investors through false and misleading statements regarding its investments and governance.

Key Allegations:

1. Misleading Investment Information:
   
   
   • Hedonova Fund and Hedonova Advisors allegedly made materially false claims about the fund's investments, operations, and the identities of its auditor, administrator, and custodian of funds.
   • From November 2021 to the present, Hedonova received at least $12.5 million in investor funds, of which at least $3.8 million came from confirmed or potential investors.

2. Fabricated Financial Statements:
   • Hedonova Advisors filed a Form ADV claiming the fund's gross asset value was significantly higher than actual holdings, reporting $704 million in 2023 and $823 million in 2024. In reality, an undated portfolio allocation schedule provided to the SEC showed holdings valued at only $79.3 million.
   • The list of purported investors provided by Hedonova included only about 85 investors with an aggregate investment amount of $1.7 million, far below the amounts claimed.

3. False Claims of Professional Relationships:
   • Hedonova claimed affiliations with reputable accounting firms and banks, which denied having any relationship with the fund or its advisors.
   • Big Four Accounting Firm A and International Bank C, named as the fund's auditor and bank respectively, found no records of any association with Hedonova.

4. Ongoing Deception:

   • Despite the SEC's investigation, Hedonova's fraudulent activities appear to continue. The fund's website remained active until at least June 2024, and recent investor communications were made as late as May 2024.

The SEC seeks to permanently enjoin Hedonova Fund and Hedonova Advisors from further violations of securities laws, require them to disgorge all ill-gotten gains with interest, and impose civil penalties. The SEC also demands the removal of misleading content from Hedonova's website and correction of false statements in regulatory filings.

This case underscores the SEC's commitment to protecting investors from fraudulent schemes and ensuring the integrity of financial markets.

The allegations against Hedonova Fund and Hedonova Advisors highlight the importance of thorough due diligence and transparency in investment practices. Investors are advised to be cautious and verify the credentials and claims of investment firms before committing their funds. The SEC's actions serve as a reminder of the ongoing vigilance required to safeguard the interests of the investing public.