Allegations and Charges
Current Status and Legal Proceedings
Unsealing of Indictment
On Thursday, the judge unsealed the indictment against Murphy. However, the document is not yet available through the government's online court-records system. It is common for an indictment to be kept under seal when the defendant is a fugitive. In this case, since Murphy has been apprehended, the need for secrecy is no longer necessary.
Online Presence
Mara Investments maintains a minimally informative website that provides no details about the firm other than its tagline: "Reengineering Market Neutrality with a fluid blend of Behavioral Science and Quantitative Analytics." The firm did not respond to requests for comment via email, and the phone number listed for them is no longer in service. Court records do not indicate whether Murphy has retained a defense attorney at this time.
SEC Alleges Fraudulent Activities by Murphy and Mara
The Securities and Exchange Commission (SEC) has filed a complaint against individuals Robert Murphy and Mara regarding their alleged fraudulent activities. According to the SEC, Murphy and his team started cold-calling potential investors around October 2016, offering an investment strategy with limited risk and high returns. They claimed that their fund would achieve capital appreciation while having low correlation to the overall market.
The SEC further alleges that Murphy diverted over $2 million of the raised capital into a nonbrokerage account controlled by Mara. This money was then used for both business and personal expenses, including a hotel near their office in Greenwich, which served as Murphy's primary residence.
Additionally, the SEC claims that Murphy misused investor funds by paying salaries and rent for his firm, as well as providing financial support to a relative's business unrelated to the hedge fund.
While Mara did engage in some trading activity, the SEC states that the profits generated were negligible. Furthermore, Murphy reportedly used some of the raised capital to repay investors, while falsifying account statements and communicating false trading activity through email.
One example cited by the SEC is when an investor expressed concern about the lack of communication regarding the fund's performance. Despite all securities trading activity in the fund having stopped for nearly a year, Murphy allegedly sent a series of emails falsely reporting trading activity and results.
The SEC also highlights that Murphy sent one investor a fraudulent tax document reporting an annual profit of 41%. In reality, no securities trades were made on behalf of the fund in 2020, resulting in no profits.
Consequently, the SEC has charged both Murphy and Mara with fraud in the offer or sale of securities, fraud in connection with the purchase of securities, and prohibited transactions by an investment advisor. The SEC is seeking an injunction, disgorgement of the embezzled funds, as well as interest and civil penalties.
