WASHINGTON (Reuters) - U.S. regulators charged a money manager with fabricating several large client accounts in order to lure legitimate investors, the Securities and Exchange Commission said on Monday.
The SEC alleged that Leila Jenkins and her firm, Locke Capital Management, invented large advisory client accounts purportedly based in Switzerland and repeatedly claimed the accounts contained more than $1 billion in assets that she managed.
Jenkins lied about the accounts' existence to investors and SEC staff and provided the SEC with "bogus" documents in 2008 such as fake account statements that she created, the SEC said.
From at least 2003 though 2009, Jenkins and her firm, with offices in New York and Rhode Island, communicated falsehoods about the accounts in brochures, meetings and SEC filings, the SEC alleged.
Locke's assets under management of its real clients never amounted to more than a very small portion of the billion-plus- dollars Jenkins claimed to manage, the SEC said.
A lawyer representing Jenkins and Locke said we have not been served yet with the complaint.
"The SEC's main issue, as we understand it, is whether Locke overstated its track record and funds under management. Locke intends to contest the allegations brought by the SEC," said Edmund Searby, a lawyer with McDonald Hopkins.
"Based on what we know, there is not any issue with client funds or securities being missing or misappropriated."
Searby added that Locke has significantly outperformed in the recent difficult times in the market.
The SEC is seeking monetary penalties.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn and Andre Grenon)
