FUNDS LOSE $1 BILLION AS ADVISERS LIE ABOUT RISKS!

SEC v. Anthony Caine, Anish Parvataneni, LJM Funds Management, Ltd., et al. — U.S. Securities and Exchange Commission Litigation Release No. 26338, dated July 1, 2025.

The SEC charged investment advisers and portfolio managers with defrauding investors by misrepresenting the risks associated with a "net short" options trading strategy. The funds suffered over $1 billion in losses during a market volatility spike in February 2018. Final judgments by consent were entered against the defendants, including permanent injunctions and monetary penalties.

In Plain English

Imagine you're lending money to a friend who promises to invest it safely, but they don't tell you about a really risky way they plan to invest it. When that risky investment goes bad, you lose a lot of money. The SEC stepped in because this friend didn't tell the whole truth about the risks involved, and they ended up having to pay back some of the money lost and face other penalties.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Promising Safe Investments Defendants Antony Caine, Anish Parvataneni, and their firms (LJM Funds Management, Ltd. and LJM Partners, Ltd.) managed investment funds for clients. They presented their strategy as a way to manage risk, specifically using a 'net short' options trading strategy.
2. Downplaying Risks Instead of fully disclosing the potential dangers, the defendants allegedly made false and misleading statements about the risks involved in their trading strategy. They also misrepresented the funds' risk management practices.
3. Misrepresenting Loss Potential Specifically, the defendants allegedly provided inaccurate worst-case loss estimates for the LJM managed funds. This hid the true potential for significant financial harm to investors.
4. Growing Assets Through Deception These misrepresentations allowed the defendants to attract more investors and grow the assets under management. This deception directly led to them receiving millions of dollars in compensation.
5. Market Volatility Exposes Flaws In February 2018, a period of high market volatility occurred. During this time, the LJM funds experienced massive trading losses, exceeding $1 billion.

The Enforcement Action

On June 30, 2025, the SEC obtained final judgments by consent against Defendants Antony Caine, Anish Parvataneni, LJM Funds Management, Ltd. (“LJMFM”), and LJM Partners, Ltd. (collectively, “LJM”). The judgments permanently enjoin the defendants from violations of antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. LJMFM and Caine were ordered to pay, jointly and severally, disgorgement of $1,720,317 with prejudgment interest of $699,129. LJM Partners and Caine were ordered to pay, jointly and severally, disgorgement of $1,567,713 with prejudgment interest of $637,112. Parvataneni was ordered to pay disgorgement of $512,724 with prejudgment interest of $208,368. Caine was ordered to pay a $500,000 civil penalty, and Parvataneni was ordered to pay a $200,000 civil penalty. Caine is enjoined for three years, and Parvataneni for one year, from managing or advising on securities investments for third parties, except for their wives and children.

Named in this action: Anthony Caine, Anish Parvataneni, LJM Funds Management, Ltd., LJM Partners, Ltd..

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