Yale Graduate Fined Over Bogus Hedge Fund: SEC

NEW HAVEN, CT — Yale University graduate Omar Zaki, 21, misled investors in his hedge fund that he ran while a student at the school, according to a Securities and Exchange Commission complaint.

Zaki managed and controlled the hedge fund and raised $1.7 million form 11 investors. He prepared false trading history and claimed that the fund had an 80% return on investment in a biotech portfolio which didn't exist, according to the complaint. He also claimed the hedge fund used a trading algorithm that had returns up to 114% even though the algorithm was never deployed.

Zaki also claimed in presentations that the fund managed between $2 million and $5 million. He also misled investors about how much their investments were worth, according to the SEC complaint.

The SEC and Zaki agreed to a $25,000 penalty and a three-year ban from working as an investment adviser, according to Bloomberg. He didn't admit or deny the SEC's conclusions.