September 28, 2016 Comments (0) Current Investigations

Och-Ziff Hedge Fund Settles Bribery Charges for $200 million

Och-ziff hedge fund
(Last Updated On: April 10, 2017)

Och-Ziff Hedge Fund Investment Losses

Have you suffered losses investing in Och-ziff hedge fund? If so, The White Law Group may be able to help.

According to Bloomberg, Och-Ziff, one of the world’s largest hedge funds with $39.1 billion in assets, has been in the crosshairs of investigators for at least five years over whether it knowingly paid bribes to government officials in Africa.

It has also suffered $5.5 billion in net outflows this year, according to the same report. In addition, Och-Ziff’s share price has plunged about 90 percent from its 2007 IPO price.

 The Securities and Exchange Commission announced in a press release today that Och-Ziff Capital Management Group has agreed to pay nearly $200 million to the SEC to settle civil charges of violating the Foreign Corrupt Practices Act (FCPA).

Och-Ziff CEO Daniel S. Och agreed to pay nearly $2.2 million to settle SEC charges that he caused certain violations along with CFO Joel M. Frank, who also agreed to settle the charges.

The SEC detected the misconduct while proactively scrutinizing the way that financial services firms were obtaining investments from sovereign wealth funds overseas.  The SEC’s subsequent investigation of Och-Ziff found that the fund used intermediaries, agents, and business partners to pay bribes to high-level government officials in Africa.

According to the SEC’s Order

According to the SEC’s order, the illicit payments induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds.  Other bribes were paid to secure mining rights and corruptly influence government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo.

The SEC’s order finds that Och-Ziff executives ignored red flags and corruption risks and permitted illicit transactions to proceed.

The SEC’s order finds that Och-Ziff’s books and records did not accurately describe the true purposes for which managed investor funds were used, and the company did not have adequate internal controls to detect or prevent the bribes.

The SEC’s order finds Och-Ziff violated the anti-bribery, books and records, and internal controls provisions of the Securities Exchange Act of 1934, and affiliated investment adviser OZ Management violated the anti-fraud provisions of the Investment Advisers Act of 1940.

Och-Ziff and OZ Management agreed to pay $173,186,178 in disgorgement plus $25,858,989 in interest for a total of $199,045,167.  The order finds that Och caused violations in two Och-Ziff transactions in the Democratic Republic of the Congo, and he agreed to pay $1.9 million in disgorgement and $273,718 in interest to settle the charges.

The order finds that Frank caused violations in Och-Ziff transactions in Libya and the Democratic Republic of the Congo, and a penalty will be assessed against him at a future date.  Och and Frank consented to the SEC’s order without admitting or denying the findings.

In Addition to the Settlement Agreement

As part of its settlement agreement with the SEC, Och-Ziff acknowledged that it expected to enter into a deferred prosecution agreement with the Justice Department in a parallel criminal proceeding, and its subsidiary OZ Africa Management GP LLC agreed to enter into a plea agreement.  Och-Ziff is expected to pay a criminal penalty of $213 million.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling high-risk investments like Och-Ziff Capital Management to their clients.  Upon information and belief, certain advisors have been touting the income potential of the investment without fulling disclosing the enormous risks.

Broker dealers are required to perform adequate due diligence on all investment recommendations to ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.  Advisors are also required to disclose all risks.

Fortunately for investors, FINRA does provide for an arbitration forum for investors to resolve disputes and if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they can be found liable for investment losses in a FINRA arbitration claim.

Recovery of Investment Losses

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Och-Ziff Capital Management, please contact The White Law Group at 1-888-637-5510 for a free consultation.

For more information on The White Law Group’s investigation of Och-Ziff Capital Management, see: Investor Alert: Och-Ziff Capital Management. 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.