WASHINGTON (CN) – The SEC claims San Diego area-based Western Pacific Capital Management and its president Kevin James O’Rourke “urged clients to invest in a security without disclosing that Western Pacific would receive a 10 percent commission.”
The SEC cease-and-desist order accused Western Pacific and O’Rourke of fraud, for failing to disclose the conflict of interest and materially misrepresenting the liquidity of a hedge fund they managed.
Western Pacific and O’Rourke acted as brokers in the nonpublic offering of Ameranth Inc. stock in 2005 and 2006, and Ameranth paid Western Pacific a 10 percent “success fee,” the SEC said.
Western Pacific neglected to tell its clients about the success fee, though, the SEC says. It added: “Western Pacific received $482,745 in success fees from Ameranth, of which $450,495 was due to investments made by its clients.”
Also, according to the SEC order, from 2005 to 2008, “Western Pacific and O’Rourke misrepresented the liquidity of The Lighthouse Fund LP, a hedge fund that they formed and managed. Western Pacific and O’Rourke repeatedly stated that only 25 percent of the Lighthouse Fund was invested in illiquid assets, when in fact 90 percent of its assets consisted of illiquid securities.”
Western Pacific is a California LLC based in Del Mar. O’Rourke is its founder, president and “sole control person,” the SEC says.