Still, authorities said, the investment firm’s oversight was too weak to catch the problem before it was too late: the firm’s controls were full of holes that made them insufficient to monitor executives’ trading.
After the funds parted ways, investigators said, coverage began.
Mr Grewal said that when Bond-Nelson was confronted by SEC staff about a false statement he had made, he took a bath and never returned. And Mr. Taylor met Mr. Tournant at a vacant construction site to discuss how to answer investigators’ questions, authorities said.
Mr. Tournant, 55, voluntarily surrendered to the Denver authorities Tuesday morning to face charges, including securities fraud, conspiracy and obstruction of justice. In a statement, Mr. Tournant̵[ads1]7;s lawyers, Daniel Alonso and Seth Levine, called the case a “meritless and ill-considered attempt by the authorities to criminalize the impact of the unique, Covid-induced market dislocation in March 2020.”
The lawyers said that Mr. Tournant was on medical leave at the time and had lost on the “significant investment” he had made in the fund.
“While the losses are regrettable, they are not the result of any crime,” the lawyers said.
In addition to the criminal case, Tournant is facing civil charges from the SEC, which has already agreed a settlement with Bond-Nelson and Taylor.
“The victims of this abuse include teachers, clergy, bus drivers and engineers, whose pensions are invested in institutional funds to support their retirement,” said SEC Chairman Gary Gensler. “This case shows once again that even the most sophisticated institutional investors, such as pension funds, can fall victim to misdemeanors.”