The SEC charged an individual with fraud on investors in a fund scheme to raise $4 million in capital from outside investors, many in small dollar amounts, into a purported hedge fund.  According to the SEC complaint, from 2018 through the spring of 2023, the defendant misled investors regarding his experience as a hedge fund manager and his ability to guarantee returns, provided falsified account statements to investors, used the majority of the capital raised for the defendant and his wife’s personal expenses rather than investing them. The alleged scheme began to unravel when investors requested that their capital to be returned and the defendant failed to do so and ceased responding to his investors. The SEC is demanding a jury trial. The Manhattan DA filed a parallel 26-count indictment against the defendant. These actions, while extreme, emphasize the importance of a compliance program with appropriate reviews and testing of marketing materials/fundraising materials, expense allocations, controls around access to investor capital, and claims made on social media, regardless of the size of the firm.