Derek Oglesby and Ambassador Capital Management charged with Fraud

Ambassador Capital Management and Derek Oglesby of Detroit, Michigan, were charged by the Securities and Exchange Commission with fraud for deceiving the trustees of a money market fund and failing to comply with rules that limit risk in a money market fund’s portfolio.

A Money market fund is designed to maintain a stable share price by investing in very low-risk securities with conversely modest yields. Under federal securities laws, a money market fund may only invest in securities determined by the fund’s board of trustees as having minimal credit risk.

Trustees were fed false statements by Derek Oglesby and Ambassador Capital Management regarding the credit risk in the securities that were purchased for its portfolio. They were also misled about the fund’s exposure to the 2011 Eurozone credit crisis, according to the regulators’ charges.

Oglesby made untruthful statements about the securities in the portfolio, and such tatements threatened to destabilize the fund, the SEC alleged.

Both Oglesby and Ambassador were accused of failing to operate under the strict regulations befitting a money market fund to limit the risk exposure and maintain the stability of the fund.

The gross yields of the funds were found by the SEC Division of Investment Management to be a market of risk, as the performance of the Ambassador Money Market Fund was consistently shown to be different from other similar funds.

Oglesby allegedly misrepresented or withheld critical facts from the fund’s trustees. Ambassador Capital Management also caused the fund to deviate from the risk-limiting provisions of the Investment Company Act of 1940. As it failed to follow these provisions it was not permitted to use the amortized cost method of valuing securities under which it priced securities as just $1 per share.

It likewise failed to perform a proper stress test of the fund’s portfolio. Hence it misrepresented itself as a money market fund, the regulators charged.

Ambassador Capital Management also violated the Investment Advisers Act of 1940 and Oglesby aided and abetted the firm’s violation. They allegedly violated the pricing, naming and recordkeeping provisions of the Investment Company Act,

The Peiffer Wolf securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud or misconduct. They are currently investigating recovery options that victims of Ambassador Capital Management’s alleged fraud can avail of. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at 585-310-5140.

Peiffer Wolf (1303 Posts)

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