On Sept. 7, both the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission filed actions in the federal Northern District of Illinois against Nikolai S. Battoo, 41, who apparently has most recently operated in Florida.
In announcing its action, the SEC said Battoo has run numerous hedge funds and claims to manage $1.5 billion for investors worldwide, including at least $100 million in the United States.
Battoo has gathered “tens of millions of dollars” in investments since 2009, all the while losing millions more, the SEC also said in a detailed, 32-page complaint.
He has managed money through a series of companies including BC Capital Group, of Panama, and BC Capital Group Limited, which is believed to be run from Hong Kong. He also manages several hedge funds and is “senior advisor” for an outfit called Private International Wealth Management, and is thought to be affiliated with FuturesOne LLC, a commodities pool located in Lincoln, Neb.
Battoo has been trying to cover up his failures and overstate the value his investments “in a number of ways,” the SEC said. When soliciting investors, Battoo has claimed an outstanding track record and “exceptional risk-adjusted returns,” according to the SEC. The agency calls Battoo’s financial empire “an amorphous syndicate of far-flung funds, entities and affiliates.”
Battoo investors suffered serious losses in 2008. He was also terminated as investment adviser for a large international bank, which included $138 million worth of hedge funds Battoo had managed. After his firing, the value of the hedge funds plummeted by almost 50 percent, the SEC said.
“Battoo attracted quire a following of investors by proclaiming his investments withstood the test of the financial crisis, but reality seems to have finally caught up with him,” said Robert Khuzami, the SEC’s director of enforcement. “Now, Battoo is offering investors one excuse after another for holding their money hostage.”
Aside from putting tens of millions of dollars into Madoff feeder funds, Battoo also lost millions through a failed derivatives investment scheme, regulators said.
Battoo apparently is now blaming the wreckage of MF Global for his inability to repay investors: “The jig appears to be up,” the SEC court complaint said. “Clients are now clamoring for redemptions, so Battoo has doubled down on his deception.”
The SEC is also going after Tracy Lee Sunderlage, 65, a Battoo colleague who had already been banned from the securities industry after a previous enforcement action. Regulators charge that Sunderlage, who now lives in Florida, poured about $95 million in assets from variable annuities and self-directed Individual Retirement Accounts into Battoo investments.
The SEC is asking a federal court for findings of fact that Battoo and Sunderlage have violated federal laws, and for injunctions to put them out of business. The agency also wants disgorgement of ill-gotten gains and unspecified civil penalties.
In its separate complaint filed in the same court, the CFTC is seeking an order prompted by Battoo and four of his companies in connection with Private International Wealth Management, a series of commodities pools. The CFTC accuses Battoo and the companies of fraud, and is asking that a receiver be appointed and that assets of the companies be frozen.