Yale Grad Accused of Running Hedge Fund Scam While in School
(Bloomberg) -- This is one college side hustle a recent Yale grad might be regretting.
Omar Zaki, 21, ran a hedge fund while enrolled at the Ivy League university, saying his firm relied on an algorithm that had produced eye-popping returns over a 10-year period, according to the Securities and Exchange Commission.
The misrepresentation is one of many that Zaki allegedly made to investors, the SEC said in a Monday complaint. In reality, the fund never used the algorithm, misled investors about how much money it managed and wrongly reported returns in excess of 80 percent from December 2016 through early March 2017, according to the SEC.
Zaki, who told investors he managed $3 million, raised $1.7 million from 11 clients from January 2017 to February 2018 by marketing a biotechnology trading strategy.
He settled the SEC’s allegations without admitting or denying its findings, agreeing to pay a $25,000 fine. Perhaps because of Zaki’s financial status as a recent college grad, the SEC is letting him pay in installments of $2,083.33 over three years. In the settlement, the regulator said Zaki is currently unemployed.
Zaki’s lawyer, Bradley Bondi, declined to comment.
If Zaki is going to follow in the footsteps of Ken Griffin, who famously started trading convertible bonds from his Harvard dorm room, he will have to be patient. As part of the SEC settlement, Zaki agreed to a bar on working as an investment adviser, with the right to reapply after three years.
An alumni database shows he graduated from Yale last year, earning a bachelor’s degree in economics and physics.
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