On June 30, the U.S. Securities and Exchange Commission (SEC) issued a Notice of Covered Action regarding action against the investment adviser Everest Capital LLC (Everest) and its sole principal, Marko Dimitrijevic. The SEC settled charges of misconduct related to risk management requiring Everest and Dimitrijevic to pay over $3 million in penalties. Once the SEC posts a Notice of Covered Action, individuals may file a whistleblower award claim for the related matter. Individuals who provide the SEC with original information that aids in a successful enforcement are qualified for monetary awards. SEC whistleblowers can earn awards that may range from 10-30% of the over $3 million settlement.
According to the SEC, Dimitrijevic failed to apply risk management protocols to currency positions in the Everest Capital Global Fund, L.P. (Global Fund). He was the sole portfolio manager. Everest allegedly gave investors misleading information about the Global Fund’s exposure to currencies. The SEC’s order states that starting in September 2014, Everest provided potential and actual Global Fund investors with materials that said Everest would not take concentrated positions in any single geographic area. According to the SEC, however, Everest and Dimitrijevic made highly concentrated investments in the euro to the Swiss franc exchange rate from September 4, 2014 to January 15, 2015. The SEC alleges that Everest and Dimitrijevic failed to provide the proper risk management regarding these investments and that the materials provided to investors were misleading about the Global Fund’s currency positions. The SEC’s order finds that Everest and Dimitrijevic violated the antifraud provisions of Sections 206(2)and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. In settling the charges, Everest and Dimitrijevic neither confirmed nor denied the SEC’s findings.
For the past decade, the SEC Whistleblower Program has been essential in exposing and fighting corporate fraud and corruption. Initially created in 2010 by the Dodd-Frank Act‘s passage , the program offers monetary awards and anti-retaliation protections to whistleblowers.
Read the SEC’s press release on the case:
SEC Charges Private Fund Adviser and Its Principal for Misconduct Relating to Risk Management