SEC Charges Abraaj Investment Management With Defrauding Investors

The US Securities and Exchange Commission (SEC) is accusing Abraaj Investment Management Ltd., a Dubai-based investment advisory firm, with misappropriating money from the Abraaj Growth Markets Health Fund. The regulator said that the fraud has resulted in losses for US investors, including charitable organizations that invested over $100M in the Fund. Also facing civil fraud charges is Abraaj founder Arif Navqi. In total, the investment adviser and Navqi are accused of misappropriating more than $230M from the fund between at least 9/2016 and 6/2018.

According to the regulator’s civil complaint, investors were told that their money would go into businesses related to healthcare in emerging markets. Instead, Abraaj Investment Management allegedly used the money to pay for cash shortfalls at the firm and at parent company Abraaj Holdings, Ltd., both of which Navqi controlled. Meantime, investors were allegedly sent financial statements and quarterly reports that were materially misleading or false.

Registered in the Cayman Islands, the Abraaj Growth Markets Health Fund’s investors had committed $850M. Additionally, the SEC stated that one of the fund’s investors was a US government entity that had committed an additional $150M debt investment.

The SEC charges come nearly two months after the Abraaj Group, which is the group of private equity funds, investment advisers, and other entities that Navqi founded, announced it was suspending investment activities at its primary private equity business and that Navqi was stepping down as the unit’s chief executive. News of the suspensions came in the wake of investors in a $1B health care fund retaining a forensic auditor to find out why their money hadn’t been used as intended, which was to build clinics and hospitals. According to The Wall Street Journal, which didn’t name the fund specifically, investors that retained the forensic accountant included the Bill & Melinda Gates Foundation, the CDC Group PLC and Proparco Group, which are backed by the US governments, and the World Bank’s International Finance Corp. unit.

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) represents high net worth individual investors and institutional investors, including charitable organizations, municipalities, and other institutional clients. If you suspect you were the victim of institutional investor fraud, Contact SSEK Law Firm so that we can help you explore your legal options.