MANHATTAN (CN) – The SEC today charged a New York-based investment adviser with defrauding investors of tens of millions of dollars by misrepresenting multibillion-dollar collateralized debt obligations tied to mortgage-backed securities. Thomas Priore and ICP Asset Management “repeatedly caused the Triaxx CDOs to overpay for securities in order to make money for ICP and protect other ICP clients from realizing losses,” the SEC said in announcing the federal complaint.
“To take just one example of many dozens, ICP caused a CDO to purchase approximately $22 million of mortgage bonds from another client account at a price of $75 per bond, even though ICP had purchased the same bonds into that client account, earlier in the day, at only $63.50 per bond,” the complaint states.
“This trade defrauded the CDO of approximately $2.5 million. In another example, ICP caused two Triaxx CDOs to purchase from another ICP client approximately $9 million of bonds at a price of $99.22 per bond, just days after ICP had purchased the same bonds in the open market at only $78.63 per bond. ICP also caused several Triaxx CDOs to purchase bonds from another CDO at artificially inflated prices to help the latter meet the margin calls of one of its creditors. In total, ICP and Priore directed more than a billion dollars of trades by the Triaxx CDOs at what they knew were inflated prices.”
Also named as defendants are ICP Securities and Institutional Credit Partners.
Priore, 41, of Chappaqua, “is the founder, president, and chief investment officer of ICP and a 76% owner of ICP Holdco through Founders, LLC,” the SEC said in its complaint.
It seeks disgorgement, an injunction and penalties.