SEC withdraws fraud charges against Indian American executive of Aphelion

New York, Sep 29
A New York district court has approved dismissal of fraud charges by the US markets regulator against an Indian-American executive at an investment advisory firm.

In May last year, the Securities and Exchange Commission had alleged that Aphelion Fund Management's chief financial officer George Palathinkal had been complicit in a financial fraud by the Chief Investment Officer of Aphelion.

It said that the firm had fraudulently altered an outside audit firm's report reviewing the performance of an investment account Aphelion managed.

Palathinkal had been charged with knowing about the fraud, but despite that, the falsified report was distributed to prospective investors. IANS had carried a report in May 2014 about the alleged fraud after SEC had filed a motion in the court.

In June this year, the SEC approached the United States District Court in the Southern District of New York, jointly with the defendent, to plead that "all claimse asserted by the SEC against Defendent George Palathinkal in this action be dismissed" with prejudice and without costs, and waiving all rights of appeal, according to documents sent to IANS by Palathinkal.

The court accepted the plea.

No mention is made in the document about the case against Chief Investment Officer Vineet Kalucha.

Kalucha was accused by the US regulator for distributing falsified performance results and siphoning investor proceeds for his luxury car payments.

The falsified report showed a phony gain instead of an actual loss and this was distributed to prospective investors.

The SEC's complaint had, alleged that company officials told investors at various times during 2013 that Aphielion had $15 million or more in assets under management.

The firm actually never had more than $5 million in assets under management at any point during that year, the regulator told the court.