Proactive Investors - A small U.S. investment firm which managed billions for Roman Abramovich, the Russian oligarch and former Chelsea FC owner, has been charged by regulators for operating as an unregistered investment adviser.
Managing the billionaire's funds in hedge funds and private equity investments, the Westchester County, New York, firm called Concord Management and its owner Michael Matlin reportedly earned tens of millions in fees advising a “wealthy former Russian official”, a Securities and Exchange Commission (SEC) lawsuit revealed.
Covering activities dating back to 2012, the SEC alleges that the firm and Matlin should have registered as investment advisers, having reportedly earned US$85 million in compensation over the decade.
Matlin and Concord coordinated investment decisions with offshore companies believed to be controlled by Abramovich, using a chain of offshore entities to keep his involvement discreet.
In response, Gurbir S. Grewal, the SEC’s director of the division of enforcement, stated that Concord "undermined the commission’s ability to exercise effective regulatory oversight over billions its client invested in the United States."
Concord and Matlin have asserted their compliance with all regulatory and legal requirements. A lawyer for Abramovich has not commented on the matter.
The SEC investigation into Concord was initiated by concerns in Congress about a regulatory loophole that allowed hedge funds and private equity firms to avoid anti-money-laundering checks. As of January 2022, Concord managed 112 hedge fund and private equity investments valued at $7.2 billion, with Abramovich being the firm's sole client.