Arizona Regulators Seek Settlement With Jacob Wohl, Admission Of "Misrepresenting"Mark Melin
The saga of Jacob Wohl, the 19-year-old self-promoted hedge fund phenomena whose tweets have been favored and re-tweed on several occasions by US President Donald Trump, is taking yet another turn. A second financial regulator, the Arizona Corporation Commission, has Wohl on their radar and is proposing he admit to “misrepresenting” his firm, regulator documents reveals. In addition, he was ordered to pay a $5,000 administrative fine and reimburse an investor. ValueWalk first reported on Wohl’s escapades March, 2015.
In an era where the perviously never before heard term “Fake News” is now tossed around like an epithet their stands Wohl. The hedge fund fund manager is an owner of multiple financial services firms and center of a hit parade of TV appearances, which is a target in the Arizona settlement.
The Arizona settlement proposal claims that “as a result of media appearances,” Wohl obtained investors from the state of Arizona. Wohl and his business associate Matthew Johnson represented to investors that the size of their assets were larger than was actually the case. The pair had previously hired a female “director of fun” to work on recruiting prospects into their system, now deleted videos produced by Wohl revealed. It is from this environment charges from Arizona point to patterns of behavior consistent across documented regulatory scrapes.
The Arizona settlement proposal claims that entities under the control of Wohl and Johnson misrepresented more than asset size. Working under the NeX Capital Management, LLC banner, Wohl and Johnson misrepresented in the risk in the investment, the legal documents show. In a previous case, Wohl had represented a Sharpe Ratio of 7.87, which was widely questioned. The two Arizona investors entered into an agreement for NeX Capital to invest, “but terminated the investment process” before any trading began.
Problem is, when the investors wanted their money back, $32,918.72 turned up missing. With only 60% of their total investment recovered after instructing the hedge fund not to trade, complaints to the Arizona Corporation Commission resulted in an investigation.
The state regulator conducted an undercover sting where they monitored Craigslist postings where Wohl and Johnson were known to troll for investors. On the Phoenix Craigslist, Montgomery Assets, Inc, “a Wyoming corporation controlled by Wohl and Johnson,” was found making “several misrepresentations,” the settlement documents say.
Undercover regulators in the course of investigations are known to review regulatory history and previous complaints, and here they had a volume of evidence from which to evaluate. Investor complaints are a flag inside a regulatory review process, as are findings from other deceptive practices allegations.
In a previous regulatory scrape, Wohl and “Nex Capital” were banned for life from membership in the National Futures Association. Under most conditions this prohibits Wohl from managing client money using futures-based derivatives products or operating as a registered “Commodity Trading Advisor (CTA)."
There are several consistent facts between the two cases. In both, Wohl is accused to soliciting hedge fund investments to the general public and then offering misleading performance data as a tool to entice clients. He relies on media interviews to provide credibility for his approach and now carries a social media celebrity persona with over 78,000 followers on Twitter, with more than 27,000 “fake,” according to TwitterAudit.com.
In both cases, customers were assured their investments were in safe hands with strong risk controls, but both times when investors asked for their money returned much of it went missing in generally unexplained fashion.
The issue of Wohl’s firm misrepresenting investors took an odd turn this past August, when a letter purportedly from the Securities and Exchange Commission surfaced, first reported by Benzinga. The letter claims the SEC concluded its investigation into Wohl and found no reason to recommend enforcement actions. When asked for comment in August, the SEC did not confirm the authenticity of the letter, however.
Wohl did not return a request for comment.