U.S. securities regulators on Tuesday charged a small Westchester County, N.Y., firm that managed billions in hedge fund and private equity investments for the Russian oligarch Roman Abramovich with operating as an unregistered investment adviser.
The Securities and Exchange Commission said in a lawsuit filed in federal court in New York that Concord Management and its owner, Michael Matlin, had earned tens of millions dollars in fees for providing investment advice to an individual it identified only as a “wealthy former Russian official widely regarded as having political connections to the Russian Federation.”
A person familiar with the matter confirmed that the individual is Mr. Abramovich, who was a governor of the Chukotka region in eastern Russia.
The New York Times reported in March 2022 that Concord, with an office in Tarrytown, N.Y., had managed dozens of investments for Mr. Abramovich. Weeks earlier, Russia had invaded Ukraine, and international authorities had begun to issue sanctions against Russian oligarchs close to President Vladimir V. Putin. The United States never imposed sanctions on Mr. Abramovich, but Britain and the European Union did.
The sanctions forced Mr. Abramovich to sell the Chelsea Football Club, the famed London soccer team. Authorities also froze more than $13 billion in assets held by financial institutions in Britain, the Cayman Islands, the Isle of Jersey and the British Virgin Islands. Some of those assets were believed to be investments that Concord had made for Mr. Abramovich with U.S. financial firms that managed offshore funds.
In June last year, the United States seized two jets believed to be owned by Mr. Abramovich.
The S.E.C. complaint covers activity beginning in 2012 when, the regulator said, the firm and Mr. Matlin, now 59, should have registered as investment advisers. The regulator said that over the next decade, the firm and Mr. Matlin had taken in $85 million in compensation.
The complaint details allegations of how Mr. Matlin and Concord coordinated investment decisions with companies based in the British Virgin Islands and Jersey that are believed to be controlled by Mr. Abramovich. The daisy chain of offshore entities was one way that Concord kept Mr. Abramovich’s involvement in the background, the S.E.C. said.
Gurbir S. Grewal, the S.E.C.’s director of the division of enforcement, said in a statement that Concord “undermined the commission’s ability to exercise effective regulatory oversight over billions its client invested in the United States.”
Jon Hammond, a spokesman for Concord and Mr. Matlin, said in a statement: “We are confident that a full and fair review of the applicable law and relevant facts will underscore that Concord Management and Michael Matlin complied with all regulatory and legal requirements.”
A lawyer for Mr. Abramovich did not return a request for comment.
The Times reported a little over a year ago that the Boston office of the S.E.C. had opened an investigation into Concord. The investigation began after some in Congress pushed to close a regulatory loophole that has allowed hedge funds and private equity firms, in some instances, to avoid conducting the same kind of anti-money-laundering checks that banks and mutual funds routinely have to perform.
The S.E.C. said that as of January 2022, Concord had managed 112 hedge fund and private equity investments valued at $7.2 billion. The regulator said the oligarch was the firm’s only client.
The S.E.C. said Mr. Matlin had instructed Concord employees to begin liquidating investments around the time that Russia was threatening to invade Ukraine. He told analysts to determine which investments could be redeemed quickly from hedge funds or sold to other investors in private transactions, the agency said.
