SEC Closes $100 Million Mutual Fund Fraud: Final Judgment Orders Abarbanel to Disgorge $106.53 Million
On February 27, 2026, the U.S. Securities and Exchange Commission announced that the U.S. District Court for the Southern District of New York had entered a final consent judgment against mutual fund manager Ofer Abarbanel, closing the civil case over an alleged scheme of about $100 million involving two mutual funds. The court entered the judgment on February 25, and the SEC published it as Litigation Release No. 26494 on February 27.
As alleged in the SEC's amended complaint, Abarbanel diverted fund assets to shell companies under his control using unauthorized, uncollateralized loan transactions that violated the terms set out in the funds' public filings and prospectuses. The two funds were the Income Collecting 1-3 Months T-Bills Mutual Fund and the State Funds – Enhanced Ultra-Short Duration Mutual Fund. The SEC filed the case on June 21, 2021, and obtained an asset freeze to safeguard the remaining investor funds; it previously reached settlements with two co-defendants and dismissed the action against one co-defendant and the six companies named as relief defendants, and the frozen assets were returned to harmed investors.
The final judgment permanently enjoins Abarbanel from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and Section 34(b) of the Investment Company Act of 1940. It orders disgorgement of $106,530,000 plus prejudgment interest of $3,639,277, offset by $88,785,385 collected through the asset freeze and returned to investors, with the remaining amount deemed satisfied by the forfeiture and restitution orders in the parallel criminal case. No civil money penalty was imposed in light of his criminal conviction and sentence. The Commission also instituted a settled follow-on administrative proceeding barring Abarbanel from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.
In the parallel criminal case brought by the U.S. Attorney's Office for the Southern District of New York, Abarbanel pleaded guilty in September 2022 and was later sentenced to four years in prison and ordered to forfeit and pay restitution to victims in the amount of $106 million.
Related: Paxful Sentenced to $4 Million Criminal Penalty for Knowingly Moving Money for Criminals
Source: U.S. Securities and Exchange Commission
Published by GSM · USA (original Chinese edition)
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