However, the authorities said, the investment firm’s oversight was too weak to realize the problem before it was too late: the company’s controls were riddled with loopholes that made it insufficient to monitor the managers’ trading.
Investigators said that after the money broke up, a cover-up began.
Mr Grewal said that when Mr. Bond-Nelson was confronted by members of the SEC over a false statement he had made, he took a bathroom break and never came back. Authorities said Mr. Taylor met Mr. Tornant at a vacant construction site to discuss how to answer investigators’ questions.
Tornant, 55, voluntarily surrendered to authorities in Denver Tuesday morning to face charges including securities fraud, conspiracy and obstruction of justice. In a statement, Mr Tornant’s lawyers, Daniel Alonso and Seth Levine, described the case as “a futile and ill-considered attempt by the government to criminalize the impact of the unprecedented market disruption caused by the Covid virus in March 2020.”
The lawyers said Mr. Tornant was on medical leave at the time and incurred losses due to the “significant investment” he made in the fund.
“Although the losses are unfortunate, they are not the result of any crime,” the lawyers said.
In addition to his criminal case, Mr. Tornant faces civil charges from the Securities and Exchange Commission, which has already approved settlements with Mr Bond Nelson and Mr Taylor.
“Victims of this misconduct include teachers, clergy, bus drivers and engineers, whose pensions are invested in institutional funds to support their retirement,” said Gary Gensler, chairman of the Securities and Exchange Commission. “This case demonstrates once again that even the most sophisticated institutional investors, such as pension funds, can become victims of a mistake.”
