The allegations read: Tweed was named a respondent in a finra complaint alleging that he obtained more than $1.6 million from his retail customers through a false and misleading private placement memorandum (ppm) he used to offer and sell interests in a pooled investment fund that he both created and controlled and as a result of the conduct alleged herein. Tweed violated finra rule 2010, both independently and by virtue of contravening sections 17(a)(2) and 17(a)(3) of the securities act of 1933. The complaint alleges that tweed drafted and circulated the ppm, which negligently misrepresented and failed to disclose material information to investors, and twenty-three customers invested in the fund without the benefit of complete and accurate information, (misleading statements and negligently misleading omissions), about the total potential fees and costs associated with the fund, tweed himself, and the entities and individual who would ultimately have immediate control over the money that customers invested. Tweed and the ppm negligently misrepresented or failed to disclose material facts to retail customers, including, among others, that tweed had replaced the fund's identified master fund with another entity controlled by an undisclosed person, who would now have immediate control over the fund's assets. As a result of these material misrepresentations and omissions, the fund investors could not evaluate the true costs and risks associated with the fund, including those relating to the individual or the entities with immediate control over their capital. Because tweed used negligently misleading information to solicit investors in the fund, those investors were prevented from vetting the undisclosed person, who was engaging in bank fraud and fraudulent trading in another unrelated pooled investment program at the same time that tweed was entrusting him with the fund's assets. In fact, just over two months after the fund offering ended, the undisclosed person abandoned the computerized quantitative trading strategy described in the ppm, exercising his undisclosed control over the fund's assets to transfer $650,000 to a third party financier, purportedly to support the importation, refining, and sale of ghanaian gold dust in the united states. The profit promised from this investment never materialized, the $650,000 has not been repaid, and it may never be recovered by the fund's investors.
