FOR IMMEDIATE RELEASE
Thursday, November 01, 2007
Contact: Carrie Bebermeyer, (573) 526-0949
Contact: Ryan Hobart, (573) 526-4734
Carnahan Cracks Chicken Little Case Wide Open
Jefferson City, Missouri - Missouri Secretary of State Robin Carnahan’s Commissioner of Securities, Matt Kitzi, issued two enforcement orders late last week against Stephen M. Coleman of St. Louis and his investment adviser firms for fraud and unsuitable recommendations related to a mutual fund and an investment group he controlled.
In the first order, Coleman was ordered to stop the unlawful sale of securities tainted by untrue statements, material omissions and schemes to defraud. It is alleged that Coleman sold investments in one of his companies, Chicken Little Fund Group, to clients of his investment adviser firm, Daedalus Capital, LLC, without disclosing his potential conflicts.
The second order seeks revocation of the investment adviser licenses for Coleman and both companies.
Coleman created the Chicken Little Fund Group for the purpose of forming mutual funds, and the first fund he formed was called the Chicken Little Growth Fund. The cease and desist order states that, as the fund’s investment advisers, Coleman and Daedalus Capital were to receive hundreds of thousands of dollars in fees and commissions, but were also required to cover certain fund expenses.
The majority of the money invested in the Chicken Little Fund Group allegedly went to pay for Stephen Coleman's salary, a financial plan for he and his wife and a $100,000 personal tax lien, leaving little money to pay the expenses of the mutual fund. After approximately two years of existence, the fund was shut down when Coleman was unable to pay expenses. The orders assert that Coleman never told his client investors that their funds would be used for his personal purposes and failed to disclose to investors that two prior lawsuits had been filed against him for breach of contract.
“Many investors hear stories about the big money to be made in hedge funds or private equity funds, and they want to be a part of that action,” said Carnahan. “But investors must be careful, and should always check out the merits, costs and fees associated with an investment, as well as the background of the people who are offering it.”
The Securities Division is seeking almost $200,000 in civil penalties and costs, and the revocation of all three respondents’ securities licenses. Coleman and his companies have thirty days to request a hearing on the fraud charges and civil penalties.
For more information regarding investments and fraud protection, visit the Secretary of State's online Missouri Investor Protection Center at www.MissouriSafeSavings.com or call the toll free investor hotline at 1-800-721-7996.
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