Andrey C. Hicks appeared to be the model of a modern, successful hedge fund manager.
Hicks obtained undergraduate and graduate degrees at Harvard University and worked for Barclays Capital before he started his own Boston-based quantitative hedge fund firm, Locust Offshore Management LLC, building it to more than $1.2 billion in assets. To assure his firm’s credibility, he enlisted Ernst & Young to serve as the fund’s auditor and Credit Suisse as prime broker and custodian.
Or so it all seemed.
As it turns out, none of these claims were true. And earlier this week, the Securities and Exchange Commission announced it had obtained an asset freeze against Hicks and his firm and accused Hicks with diverting some of least $1.7 million raised from 10 investors into his personal bank account.
Among the allegations in the complaint: He never received any type of degree from Harvard, never worked at Barclays, his fund only had about one-tenth the amount of capital it claimed to have and did not engage the blue chip firms E&Y and Credit Suisse.
Call Hicks a Madoff Wannabe, though his is the latest of several dozen Ponzi schemes perpetrated by purported hedge fund managers that have been shuttered by the SEC in the past few years.
“Hicks lied to investors about virtually every aspect of his fictitious hedge fund,” said David P. Bergers, Director of the SEC’s Boston Regional Office, in a press release.
Hicks failed to respond to an email seeking comment. Hicks brazenly peddled his credentials in a very public manner. He created a Linkedin page that states he earned a BA in biochemistry and a Ph.D in Applied Mathematics from Harvard after attending the School of Engineering and Applied Sciences from 2005 to 2007.
On http://andreyhicks.multiply.com/, Hicks even embellishes this accomplishment, stating as part of his educational accomplishments: “He has researched human and simian-human immunodeficiency virus and authored papers on the subject, including ‘Macrophages in SHIV Infection,’ for which he won Intel’s International Science and Engineering Fair Grand Award.”
Judging from that, Hicks might have been the second coming of Jim Simons.
The SEC says in its complaint, however, that Hicks merely attended Harvard’s undergraduate college for three semesters starting in the fall of 2001. The college required him to withdraw after the spring semester for failing to meet its minimum requirements. He successfully petitioned for re-enrollment and attended Harvard for one more semester in the spring of 2003, only to have Harvard again order him to withdraw, this time for good.
The SEC also says Hicks only took one math course while at Harvard, and received a D-.
Hicks’s firm also stated in offering materials to potential investors that in the fall of 2009, he “accepted a position at Barclays” and that “while at Barclays, Andrey began trading across several different asset classes, and expanded into futures, options market trading and foreign exchange (FX).” Hicks also claimed that in a little over 12 months’ time, he was managing $16 billion for the firm. The offering then claimed Hicks left Barclays last January to form Locust Offshore. So did his Linkedin profile, and it still does.
In addition, the Locust Fund falsely claimed its year-to-date return was 78.59 percent, which would have made it the best performing hedge fund this year. And the website described data for the fund as “powered by Credit Suisse, which the SEC states created “the false and deceptive impression” that the data came from Credit Suisse. “This data was all materially false and deceptive,” the complaint says, stressing Credit Suisse does not have any accounts in the name of Locust Offshore Fund.
Bank records for the LOM account dedicated to the receipt of Locust Fund subscriptions show deposits of only about $1.7 million, the complaint adds, with all but some $300 million of that coming between last June and October from 10 investors in Massachusetts, Minnesota, and Iowa.
In one case, Hicks talked a real estate finance professional into investing $100,000 while sitting next to him during a flight. The unnamed investor ran a successful stock fund with about $1.5 billion in assets. Another investor reportedly is Kris Humphries, the NBA player who was just dumped by wife of 72 days, Kim Kardashian.
The SEC said its investigation is continuing. Meanwhile, Locust’s website is still up, promoting its putatively quantitative talents. At the bottom of the home page, however, it says investment is limited to accredited investors and qualified purchasers. “For regulatory purposes,” it adds, we must confirm your eligibility before a user account can be created.”
After all, Locust doesn’t want to run afoul of regulators.
