A 21-year-old Yale graduate duped 11 individuals into investing $1.7 million in an unregistered hedge fund he operated while he was an undergraduate student, according to the Securities and Exchange Commission. Omar Zaki, 21, misled investors with prospectuses that contained false information about his trading history, his fund’s growth and management team, the SEC said Monday.
The precocious investment adviser also inflated the fund’s assets and kept its actual performance under wraps, according to the complaint. He gave presentations claiming the fund’s assets totaled between $2 million and $5 million, when assets under management were never greater than $1.3 million, according to the complaint.
The scheme was uncovered after a pair of investors — who were considering financing an offshore fund with Zaki — asked to verify the fund’s bank and brokerage account balances directly with the custodians.
Zaki on Monday settled fraud charges with the commission, agreeing to pay a $25,000 civil penalty and to comply with a three-year ban from working as an investment adviser. The complaint notes that he’s unemployed and will allow him to pay the fine in installments of $2,083.33 over a three-year period.