SEC Sanctions Gemini Fund Services for Inflated NAV

Did your broker or financial advisor recommend you invest in the GEMINI FUND V?
GEMINI FUND V raised $60 million in committed capital for its fifth fund, Gemini Investors V. The firm raised $58 million for its last fund, Gemini Investors IV, which closed in 2005. Gemini usually makes investments of $3 million to $8 million and has an investment horizon of five years from the date of initial funding.
According to the Securities and Exchange Commission (SEC), Gemini calculated a Net Asset Value (NAV) that was allegedly inflated as a result of including assets in the NAV, however the custodian bank did not include these assets because it had not received appropriate documentation. Gemini erred in that, although it did not know that these assets were fake at the time it was calculating the NAV, allegedly, it did know that there were significant discrepancies between its own records and those of the custodian bank, and it did nothing to address this.  As of March of 2018, the latest NAV of the Gemini Fund V is approximately 20 cents on the dollar so investors suffered what is believed to be an almost 80% loss of principal.
In the SEC order, the SEC suggests that the next steps should have been to: (1) further investigate the problem with the assets, (2) notify the investing public or the board of directors of the Fund, and/or (3) reduce the share price to reflect the problem.
Pursuant to the proceedings, Gemini was ordered to cease and desist from committing or causing any violations and any future violations of Sections 206(1) and 206(2) of the Advisers Act, and to comply with a number of undertakings, including obtaining the services of an independent compliance consultant to conduct a comprehensive review of, and recommend corrective measures concerning Gemini’s compliance and other policies and procedures with respect to: (i) NAV calculation and publication; (ii) reconciliation of data with fund custodians; (iii) monitoring of the performance of administrative and professional services rendered to its mutual fund clients by other service providers; (iv) coordination of fund audits; (v) communications with clients, auditors, and others about possible failures to comport with fund governing documents or possible failures to comply with the law by clients or investment advisers; and (vi) detecting and addressing fraud. In addition, Gemini has been ordered to pay a civil monetary penalty of $400,000, disgorgement of $147,334, and prejudgment interest of $14,072.
Illiquid investments may not be suitable for all investors. The projects often have no significant operating history. Some firms sponsor many programs, which may compete with one another or face other conflicts of interest. They often have upfront placement costs of approximately 10%, plus marketing and other costs of approximately 5%. They may have no liquid market and often include significant limits on transferability. Exposure to real estate can be obtained in a much cheaper fashion though exchange-traded funds (ETFs), many of which have been on the market for a decade or more.
Given these dire red flags, it is apparent to Soreide Law Group that some investors may have not been made fully aware of all the risks. Currently, as of March 2018, GEMINI FUND V has a net asset value of about 20% which may encourage investors to take a second look at their investment and ask themselves if their broker who was usually paid a 7% up front commission, really had your best interest in mind in selecting this investment.
Soreide Law Group represents investors nationwide on a contingency fee basis against stock brokers and brokerage firms through the FINRA forum. If you invested in any Vista Drilling program call Soreide Law Group at (888) 760-6552 or visit https://www.SecuritiesLawyer.com.