The allegations read: The securities and exchange commission ("commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against michael e. Lewitt ("respondent"). In anticipation of the institution of these proceedings, respondent has submitted an offer of settlement (the "offer") which the commission has determined to accept. The commission finds that on april 10, 2024, a judgment was entered by consent against respondent in the civil action entitled securities and exchange commission v. Third friday management, llc, et al., civil action number 9:23-cv-81332, in the united states district court for the southern district of florida (the "judgment") permanently restraining and enjoining respondent from future violations of section 17(a) of the securities act of 1933 ("securities act"), section 10(b) of the securities exchange act of 1934 ("exchange act"), exchange act rule 10b-5, and sections 206(1) and 206(2) of the advisers act, and from aiding and abetting any future violations of section 206(4) of the advisers act and rules 206(4)-2 (the "custody rule") and 206(4)-8 thereunder. The commission's complaint alleged that, while managing the fund, respondent made material misrepresentations and omissions to prospective investors and investors concerning a material change in the fund's stated investment trading strategy. From at least 2012, respondent marketed the fund's options strategy of "invest[ing] exclusively in s&p 500 index options which have full liquidity" and further elaborated in the fund's private placement memorandum ("ppm") the fund's "strategy of selling straddles on the s&p 500 index over a portfolio of income generating securities," which the ppm described as securities such as "u.s. Treasury bills, municipal bonds, government and corporate bonds, and other similar instruments." however, between january 2018 and november 2019, without notifying the fund's limited partners, respondent caused the fund to make 45 loan advances totaling more than $19 million to a distressed company that acquired and operated struggling rural hospitals and filed for bankruptcy after receiving the majority of the fund's assets (the "bankrupt entity"). Respondent failed to disclose, among other things, his financial interest in a group of private affiliated companies which had committed to investing $30 million to the bankrupt entity. In addition, respondent misappropriated at least $4.7 million of investor funds for personal use, including over $900,000 to pay an irs lien, and took advanced management fees and performance fees on fund assets which he had materially overvalued. Further, respondent aided and abetted third friday's violation of the custody rule.
