Fund Administrator Charged For Missing Red Flags

The Securities and Exchange Commission today announced settled charges against Theorem Fund Services LLC (TFS), a fund administrator based in Boca Raton, Florida, for failing to respond to red flags relating to a fraud against a private fund and its investors. According to the SEC’s order, TFS provided administration services to a fund managed by EIA All Weather Alpha Fund Partners and Andrew M. Middlebrooks, both of whom the SEC charged in May 2022 with fraud for allegedly engaging in a scheme that included the misappropriation and misuse of investors’ funds over a five-year period. According to the order, during TFS’s engagement, the fund suffered significant losses as a result of trading by EIA and Middlebrooks; however, TFS, at the direction of EIA and Middlebrooks, calculated the Net Asset Value, which did not recognize the losses, and sent investors account statements that materially overstated the value of their investments.