A Florida-based investment firm that oversees $500 million in assets has inflated its main hedge fund’s assets and returns since 2017, according to three employees who have filed a whistleblower complaint with the Securities and Exchange Commission and who spoke exclusively with NBC News.
The TCA Fund Management Group’s Global Credit Master Fund, which lends money to small and mid-size companies in distress, has failed to book losses on defaulted loans and has recorded fee revenues it has not received and never will, the employees said.
Bloomberg Law reported Wednesday that in a letter to investors, TCA said that the Global Credit Master Fund had “received redemption and withdrawal requests in excess” of available cash and that it planned to liquidate the fund amid an ongoing SEC investigation. NBC News has not independently confirmed the contents of the letter.
Robert Press, TCA’s founder and chairman, did not respond to a request for comment.
TCA’s attorney, Carl Schoeppl, said in a statement: “TCA Fund Management Group Corp. treats this matter very seriously and has taken immediate steps to address the SEC whistleblower complaint by launching an internal investigation into the known allegations to determine the truth and has been in contact with the SEC and has offered full cooperation since first becoming aware of the complaint.”
Schoeppl did not respond to questions about the reported closing of the fund.
A spokeswoman for the SEC declined to comment.
Overstated investment returns are an investor’s worst nightmare, and some of Wall Street’s biggest scandals have involved phantom numbers. Because fund managers typically are paid as a percentage of the assets they oversee, padding returns can be lucrative. After a decadelong bull market in stocks, the drive to attract investor money only increases the temptation to inflate returns.
In a recent letter to investors reviewed by NBC News, the TCA fund reported consistent annual gains of 7 percent to 8 percent in recent years. The fund has operated since 2011.