The Financial Industry Regulatory Authority said it has barred two Buffalo-area brokers from the securities industry for life, due to fraud in connection with the sale of a hedge fund.
The regulator said the two brokers, Timothy S. Dembski and Walter F. Grenda Jr., “neither admitted nor denied the charges, but consented to the entry of (the regulator’s) findings.”
FINRA said the alleged fraud involved the sale of Prestige Wealth Management Fund LP, and occurred while they were employed by the Mid Atlantic Capital Corp. Dembski and Grenda left Mid Atlantic in 2013.
FINRA claimed the two men made “material misrepresentations and omissions” to make investors believe the hedge fund was a “growth” fund that would be based on a computer algorithm that automatically included risk protections. But the regulator said the fund was actually a “highly speculative investment” and its chief investment officer had full control over investments made and was not obligated to follow the computer algorithm. FINRA said the fund lost more than 80 percent of its value in the last full month it traded.