Peter Rajinder Kohli, of Pottstown, Pennsylvania, chief executive officer and present of DMS Advisors and chairman and trustee of DMS Funds, has been charged along with DMS Advisors, Inc., Marshad Capital Group, Inc., and The DMS Funds in a Complaint by the Securities and Exchange Commission (SEC) alleging that Kohli and the firms committed fraud against investors in reference to mutual funds transactions. Securities and Exchange Commission v. Peter R. Kohli, et al., Civil Action No. 5:16-cv-5143 (E.D. Pa. Sept. 28, 2016).
According to the Complaint, between 2012 and 2015, Marshad, DMS Advisors, and Kholi fraudulently induced one-hundred and twenty investors to make $3,200,000.00 in investments in the entities which Kohli had controlled. The DMS Funds had been established by Kohli in 2012, in which the Funds were comprised of mutual funds focused in emerging markets. Customers were allegedly solicited by Kohli to make investments after being providing prospectuses and documents plagued with misrepresentations concerning the complexity and risk of DMX Funds. The documents reportedly disregarded the risk that the majority of the funds’ expenses were not capable of being paid by Kohli and DMS Advisors based upon a lack of income or assets.
The SEC alleged that Kohli’s recklessness caused the funds to suffer, which prompted him to commit additional fraud in order to prevent the funds from failing. In particular, material misrepresentations were allegedly made by Kohli in selling warrants to investors for purchase the stock in Marshad – another company controlled by Kohli. Subsequently, investors’ contributions in the mutual funds had been misappropriated by Kohli. Investors were then allegedly lied to by Kohli concerning promissory notes sales in Marshad in order for him to accumulate funds to cover expenses as the funds were in imminent danger of collapsing.
The SEC alleged that the conduct of Marshad, DMS Advisors, and Kohli was violative of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, and Securities Act of 1933 Section 17(a), Investment Advisers Act of 1940 Sections 206(1), 206(2), and 206(4), along with Rule 206(4)-8, and Investment Company Act of 1940 Section 34(b).
FINRA Public Disclosure reveals that on November 26, 2014, a customer was awarded $9,240.03 in damages according to an investment related arbitration claim involving Kohli’s misconduct, based upon allegations that Kohli, while employed with Trustmont Financial Group, effected unauthorized transactions in reference to Pacific Life variable annuity accounts. Kohli’s registration with Trustmont Financial Group, Inc. was terminated on April 29, 2015, based upon allegations that he entered into a loan arrangement with a customer in violation of Trustmont’s policies.
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