FINRA has barred two Buffalo, New York advisers, Timothy S. Dembskyi and Walter F. Grenda, from the securities industry for broker fraud in relation to the sale of a hedge fund, the Prestige Wealth Management Fund, LP. Dembski and Grenda’s misconduct occurred while they were employed with Mid Atlantic Capital Corporation.
FINRA discovered that Dembski and Grenda made material misrepresentations and omissions to make investors think that the fund was a “growth” fund that would be centered around a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund. However, in actuality, the fund was a highly speculative investment, the fund’s Chief Investment Officer had complete control over investments made, and it was not obligated to follow the computer algorithm. In its last month that it was traded, the fund lost more than eighty percent of its value.
Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “In 2015, FINRA barred nearly 500 brokers from the securities industry and we will continue to root out those brokers who seek to take advantage of their customers.”
FINRA found that when marketing the hedge fund, Dembski and Grenda distributed a Private Placement Memorandum that they knew contained material misrepresentations about the Chief Investment Officer’s professional experience. The PPM stated that the Chief Investment Officer had “worked in the financial services industry for over 14 years,” “co-managed a portfolio of over $500 million” and was a “Vice President of Investments for a New York based investment company,” all of which were false.
In settling this matter, Dembski and Grenda neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
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