According to a press release dated March 2, 2009, the complaint charges Westgate and certain of its officers and directors, including James M. Nicholson, with violations of Section 10(b) of the Securities Exchange Act of 1934 and various other torts for issuing materially false and inaccurate financial statements and other information to the investing public. For instance, Westgate represented that it managed assets ranging from $600 million to $900 million, that it used prime brokers for custody of fund assets and that its financial statements were audited by independent certified public accountants. However, the complaint alleges that Westgate had no more than $100 million under its management, failed to use independent auditors and failed to place fund assets with custodians.
On February 25, 2009, the SEC filed a complaint against Westgate and Nicholson charging them with operating a large-scale scheme that defrauded hundreds of investors of millions of dollars by providing them with misleading marketing materials that overstated investment returns and by misrepresenting the value of the assets under management.
On May 18, 2010, an Order Of Dismissal Without Prejudice under Federal Rule of Civil Procedure 41 (a)(2) was issued by the Court. The Court granted the defendants’ motion and by this order dismisses this action without prejudice as to all claims and all parties.