The U.S. Securities and Exchange Commission has put out an emergency asset freeze against Peter Kohli, a former broker. According to the regulator, the Pennsylvania resident bilked at least 120 investors when he fraudulently raised over $3.2M from them between 2012 and 2015. The regulator attributes the funds collapse to the ex-broker’s “extreme recklessness.”
At the time, Kohli was CEO and president of DMS Advisors, a dually-registered investment adviser and brokerage firm. He began the DMS Funds series, comprised of four emerging market mutual funds, in 2012. The SEC claims that he overstated the funds’ level of sophistication while disregarding the risk that he and DMS Advisors might not be able to cover certain expenses.
The Commission claims that Kohli stole money from investors as the funds became beleaguered and he committed three other frauds to keep his scam going. He also purportedly misappropriated money he solicited to invest in one of the funds and his accused of drawing in two kinds of investments in Marshad Capital Group, which was DMS advisors’ holding company.
The SEC claims that the ex-broker sold Marshad promissory notes to raise funds to pay for fund costs, as well as warrants in Marshad. He purportedly made false claims to investors by telling them that the holding company had moved toward an IPO.
Kohli is accused of submitting false registration statements with the SEC. Now, the Commission has filed an emergency asset freeze, in addition to the civil charges in this mutual fund fraud case.
The SEC charges against Kohli include violations of:
- The Securities Act of 1933’s Section 17(a)
- The Securities Exchange Act of 1934’s Section 10(b) and Rule 10b-5 thereunder
- The Investment Advisers Act of 1940’s Sections 206(4), 206(2), and 206(1) and Rule 206(4)-8 thereunder
- The Investment Company Act of 1940’s Section 34(b)
Civil charges have also been brought against DMS Advisors and Marshad.