The U.S. Securities and Exchange Commission (SEC) has recently taken legal action against Third Friday Management and Michael Lewitt, an associate of James Biden, President Joe Biden’s younger brother. The lawsuit, filed in the Southern District of Florida, accuses the defendants of engaging in fraudulent activities and breaching their fiduciary duties to clients, including investors in their fund.
Investment Strategy Shift:
Up until 2018, Third Friday Management focused exclusively on investing in S&P 500 index options. This strategy was marketed to a range of investors, including many senior citizens. However, the SEC alleges that the company changed its investment approach without notifying its investors.
Hidden Financial Interests:
One of the central allegations is that Michael Lewitt, who had a significant role in managing the fund, failed to disclose his personal financial interests. Specifically, he had a partnership with a group of private companies, a critical piece of information that should have been shared with investors to maintain transparency.
Misappropriation of Investor Funds:
The SEC contends that Lewitt misappropriated substantial sums of investor funds for personal use. Among these funds, he reportedly used over $900,000 to pay off a personal IRS tax lien. The SEC further claims that Lewitt redirected approximately $30 million from the fund into a group of companies focused on distressed healthcare investments, several of which eventually went bankrupt.
A Separate Lawsuit:
Adding to the legal complexity, one of the companies in which Lewitt invested the fund’s money, Platnium Global Health Partners, LLC, filed a separate lawsuit. In this lawsuit, Lewitt, James Biden, and others are accused of fraudulent activities against Diverse Medical Management, a corporation dedicated to healthcare investments in rural communities. This separate legal action reveals the interconnected nature of these financial dealings.
Notably, George Mesires, a lawyer with prior experience representing both James Biden and Hunter Biden, is identified as the legal representative for Third Friday Management in this lawsuit.
Summons and Court Appearance:
Michael Lewitt has been summoned and must appear in court within 21 days to address the SEC’s allegations. This legal action underscores the seriousness of the charges and the potential consequences for those involved.
In summary, the SEC’s lawsuit against Third Friday Management and Michael Lewitt raises significant concerns about transparency, fiduciary responsibility, and the proper handling of investor funds. The allegations of undisclosed personal financial interests and the misappropriation of millions of dollars are central to the case. Moreover, the connection to a separate lawsuit involving distressed healthcare investments further complicates the situation.
As this legal battle unfolds, it is essential to stay updated on developments and outcomes, as they could have far-reaching implications not only for the individuals involved but also for the broader financial industry’s standards and regulations.