Adviser accused of deceiving retirees about 'low-risk' investments

The Securities and Exchange Commission has accused Colorado investment adviser Neal Greenberg of misleading clients, including retirees, while marketing hedge funds that later had losses linked to Bernard Madoff's record Ponzi scheme. Mr. Greenberg falsely portrayed three of his Agile Group hedge funds as “immensely” diversified and low-risk, even as they concentrated positions and used leverage, according to a civil complaint filed by the SEC last week. The funds held $174 million in investor capital when they suspended redemptions in September 2008 following losses linked to an outside investment fraud, the complaint said. Three months later, investors learned that they also had lost money through investments linked to Mr. Madoff, the SEC said. The commission didn't accuse Mr. Greenberg of knowing about either of those scams. “Greenberg's unsuitable recommendations and misrepresentations deceived his advisory clients into believing their money was safe with him,” Donald Hoerl, director of the SEC's regional office in Denver, said in a statement. Clients included “conservative investors who were dependent upon their investment income for some or all of their living expenses.” A call to Steven Feder, Mr. Greenberg's lawyer, wasn't returned. The SEC also said that the Agile funds collected at least $2 million in inadequately disclosed fees between 2003 and 2006. The complaint seeks an administrative hearing to consider seizing Mr. Greenberg's profits and imposing fines.