SEC v. PREMIUM POINT INVESTMENTS LP; ANILESH AHUJA; NEIL AHUJA; AMIN MAJIDI; and JEREMY SHOR, No. 1:18-cv-04145, Southern District of New York (May 9, 2018) — Complaint

Daniel Michael
C. Dabney O’Riordan*
Mark D. Salzberg
Preethi Krishnamurthy
Osman Nawaz*
H. Gregory Baker
Attorneys for the Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281-1022
(212) 336-0116 (Krishnamurthy)
*Not admitted in U.S. District Court for the S.D.N.Y.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
-against-
PREMIUM POINT INVESTMENTS LP,
ANILESH AHUJA a/k/a NEIL AHUJA,
AMIN MAJIDI, and JEREMY SHOR,
Defendants.

COMPLAINT
18 Civ. ___ (      )

JURY TRIAL DEMANDED

 Plaintiff  Securities and Exchange Commission (the “Commission”), for its Complaint
against defendants Premium Point Investments L.P. (“Premium Point”), Anilesh Ahuja a/k/a Neil
Ahuja (“Ahuja”), Amin Majidi (“Majidi”), and Jeremy Shor (“Shor”) (together, “Defendants”),
alleges as follows:
SUMMARY
1. Defendant Premium Point, a Commission-registered investment adviser that
managed billions of  dollars in assets at its height, and the individual defendants engaged in a
fraudulent scheme to inflate the value of  securities—at times by more than 100%—held by several
private investment funds Premium Point advised.

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2. From at least September 2015 through March 2016 (the “Relevant Period”),
Premium Point investment funds’ performance was deteriorating and some of  the funds’ major
investors were requesting large redemptions from the funds.
3. Ahuja, Premium Point’s majority owner and chief  executive officer, and Majidi, the
portfolio manager of  one Premium Point investment fund, sought to hide the funds’ poor
performance, both to stem redemptions and to persuade investors to invest in a new Premium Point
fund, by inflating the value of  securities in the Premium Point funds.
4. Pressured by Ahuja and Majidi, Shor—a Premium Point trader—and another
Premium Point trader (the “Trader”) relied on two “levers” to inflate the values of  securities held by
the investment funds.
5. First, Shor and the Trader, with Ahuja’s and Majidi’s knowledge, obtained inflated
price quotes on securities, or “marks,” from at least one friendly registered representative (the
“Representative”) of  a brokerage firm (the “Brokerage Firm”).
6. In return, Shor and the Trader promised to send securities trades to the Brokerage
Firm for which it would earn commissions.
7. Premium Point then used these inflated price “marks” to calculate and report the
funds’ monthly valuations to investors.
8. Second, Shor and the Trader, again with Ahuja’s and Majidi’s knowledge, used
“imputed” mid-point prices to inflate the values of  the funds’ securities.
9. As Premium Point generally disclosed to investors, it used the mid-point price of
each security—a price halfway between the bid price, the highest price at which a prospective buyer
is willing to buy the security, and the ask price, the lowest price at which a prospective seller is willing
to sell the security—in the funds’ portfolios to value the investment funds.

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10. Unbeknownst to at least most investors, Premium Point itself  routinely derived, or
“imputed,” the mid-point prices of  securities, even where Premium Point could easily obtain a mid-
point price for the security from a broker. To do so, Premium Point took a bid price for a particular
security and added half  the spread between the bid and ask prices on a broad sector of  securities—
not the spread on that particular security—to “impute” a mid-point price for that security.
11. As Ahuja, Majidi, and Shor knew, this “imputed” mid-point practice routinely and
significantly inflated the values of  securities in the funds’ portfolios, particularly during the Relevant
Period.
12. Indeed, in September 2011, a large potential fund-of-funds investor, contemplating
investing in one of  the funds, received a draft of  a new Premium Point pricing policy. The policy
disclosed that Premium Point would use an imputed mid-point price to value securities in that fund.
13. The potential investor told Premium Point—in a communication conveyed to both
Ahuja and Majidi—that the investor would not invest in the fund if  Premium Point valued the
fund’s portfolio using imputed mid-point prices because that practice would give Premium Point too
much discretion in the valuation process.
14. At the investor’s insistence, Majidi removed the imputed mid-point provision from
Premium Point’s draft pricing policy and never included it in any final pricing or valuation policy,
and the investor subsequently invested a substantial amount in a Premium Point fund.
15. Nevertheless, as Ahuja and Majidi knew, Premium Point continued to use imputed
mid-point prices to value the funds for years, including throughout the Relevant Period, without
telling that investor and at least most other investors.
16. The Defendants’ fraudulent valuation scheme resulted in Premium Point’s reporting
inflated month-end net asset values (“NAVs”) and inflated month-end and annual performance for

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the funds to existing and potential investors. These inflated valuations enabled Premium Point to
receive excess fees.
17. Ahuja and Majidi knowingly relied on the funds’ inflated performance to deter
investor redemptions and raise additional investor money for the funds.
18. Ahuja further knowingly relied on the inflated performance figures for one of  the
funds to try to persuade investors to invest in a second version of  that fund (which ultimately failed
to materialize).
19. The fraudulent scheme eventually collapsed as Premium Point faced difficulties in
meeting investors’ redemptions because it could not sell securities in the funds’ portfolios at the
inflated valuation prices and as the funds’ auditor questioned Premium Point’s valuations.
20. Premium Point later revised the valuation of  the funds’ securities for the Relevant
Period and determined that it had previously overvalued the funds. Based on the revised valuations,
Premium Point had overvalued the funds by an average of  over 14% per month during the Relevant
Period.
VIOLATIONS
21. By virtue of  the foregoing conduct and as alleged further herein:
(a) Defendants violated Section 10(b) of  the Securities Exchange Act of  1934 (the
“Exchange Act”) [15 U.S.C. § 78j(b)], Rule 10b-5(a) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a) and (c)], and Sections 17(a)(1) and (3) of  the Securities Act of
1933 (“Securities Act”) [15 U.S.C. § 77q(a)(1) & (3)];
(b) Premium Point, Ahuja, and Majidi violated Sections 206(1), 206(2) and 206(4) of
the Investment Advisers Act of  1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1),
80b-6(2) & 80b-6(4)], and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-
8(a)(2)];

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(c) Premium Point violated Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and
Rule 206(4)-2 thereunder [17 C.F.R. § 275.206(4)-2];
(d) Ahuja and Majidi aided and abetted Premium Point’s violations of  Advisers Act
Sections 206(1), 206(2), and 206(4) [15 U.S.C. § 80b-6(1), 80b-6(2) & 80b-6(4)],
and Rule 206(4)-8(a)(2)thereunder [17 C.F.R. § 275.206(4)-8(a)(2)]; and
(e) Shor aided and abetted Premium Point’s, Ahuja’s, and Majidi’s violations of
Advisers Act Sections 206(1), 206(2), and 206(4) [15 U.S.C. § 80b-6(1), 80b-6(2)
& 80b-6(4)], and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)].
22. Unless Defendants are permanently restrained and enjoined, they will again engage
in the transactions, acts, practices, and courses of  business set forth in this Complaint or in
transactions, acts, practices, and courses of  business of  similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
23. The Commission brings this action pursuant to authority conferred upon it by
Securities Act Section 20(b) [15 U.S.C. § 77t(b)], Exchange Act Section 21(d) [15 U.S.C. § 78u(d)],
and Advisers Act Section 209(d) [15 U.S.C. § 80b-9(d)]. The Commission seeks a final judgment:
(i) permanently enjoining Defendants from violating the federal securities laws and rules this
Complaint alleges they have violated; (ii) requiring Defendants to disgorge all ill-gotten gains,
together with prejudgment interest, received as a result of  their violations; (iii) requiring Defendants
to pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange
Act Section 21(d) [15 U.S.C. § 78u(d)], and Advisers Act Section 209 [15 U.S.C. § 80b-9]; and
(iv) ordering any other relief  the Court may deem just and appropriate.

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JURISDICTION AND VENUE
24. This Court has jurisdiction over this action under Securities Act Section 22(a) [15
U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15
U.S.C. § 80b-14].
25. Defendants have, directly or indirectly, made use of the means or instrumentalities of
interstate commerce or of the mails, in connection with the transactions, acts, practices, and courses
of business alleged in this Complaint.
26. Venue lies in this District under Securities Act Section 22(a) [15 US.C. § 77v(a)],
Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-1].
Defendants may be found in, are inhabitants of, or transact business in this District, and certain of
the acts, practices, transactions, and courses of  business alleged in this Complaint occurred within
the Southern District of  New York, where Premium Point had its office during the Relevant Period.
DEFENDANTS
27. Premium Point, a Delaware limited partnership that Ahuja founded in 2008, is an
investment adviser that has been registered with the Commission from April 2009 through at least
April 2018, and with its principal place of  business in New York, New York. From at least 2009
through 2017, Premium Point and/or its affiliates had custody of  the assets of  the investment funds
that Premium Point advised based on access to the funds’ securities.
28. Ahuja, age 49, resides in New York, New York. Ahuja founded Premium Point and
at all relevant times was its chief  executive officer, chief  investment officer, and majority owner.
29. Majidi, age 51, resides in New York, New York. From November 2008 to June
2016, Premium Point employed Majidi, initially as its chief  risk officer and, beginning in 2015, as the
portfolio manager of  one Premium Point fund. Majidi received a percentage of  Premium Point’s net
annual income and any incentive fees.

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30. Shor, age 45, resides in New York, New York. From the spring of  2014 until he
resigned in March 2016, Shor served as a director and trader of  non-agency securities at Premium
Point.
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OTHER RELEVANT INDIVIDUALS AND ENTITIES
31. The Trader worked for Premium Point before, during, and after the Relevant
Period, first in risk management and later as an associate director and trader of  asset-backed
securities.
32. The Representative served as a registered representative of  the Brokerage Firm
from May 2015 through approximately September 2015 and from October 2016 to April 2017.
33. The Brokerage Firm is a small, regional broker-dealer that was registered with the
Commission at all relevant times.
34. Premium Point Master Mortgage Credit Fund, Ltd. and Premium Point
Offshore Mortgage Credit Fund, Ltd.—each incorporated in the Cayman Islands and currently in
voluntary liquidation proceedings there—and Premium Point Mortgage Credit Fund LP,
incorporated in Delaware, are a group of  unregistered funds (collectively, the “Mortgage Credit
Fund”), organized in a master-feeder structure.
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35. Premium Point Master New Issue Opportunity Fund, Ltd. and Premium
Point Offshore New Issue Opportunity Fund, Ltd.—each incorporated in the Cayman Islands
and currently in voluntary liquidation proceedings there—and Premium Point New Issue

1
  “Non-agency” means that a government-sponsored enterprise, such as the Federal National
Mortgage Association (known as Fannie Mae), did not guarantee the securities.
2
  A “master-feeder structure” is a two-tiered structure in which investors invest their capital in
a “feeder” fund, which in turn invests in a “master” fund, managed by the same investment adviser
(or an affiliate), that buys and sells the assets.

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Opportunity Fund LP, incorporated in Delaware, are a group of  unregistered funds (collectively,
the “New Issue Fund”), organized in a master-feeder structure.
FACT S

I.         Background

A. Premium Point and the Funds

36. During the Relevant Period, Premium Point described itself  as “focused on
investment opportunities in securities, mortgages, loans, real property, as well as[ ] consumer
receivables.”
37. At all relevant times, the Mortgage Credit Fund invested in mortgage securities,
including subprime and interest-only non-agency bonds.
38. At all relevant times, the New Issue Fund invested in mortgage securities, including
new-issue prime jumbo residential mortgage bonds.
39. Premium Point received fees for its advisory services, partly based on the value of
the assets in the funds it managed according to the fund valuations it provided.
40. For example, on a quarterly basis, Premium Point received a management fee from
each non-affiliated investor equal to 1.5% per annum of  the value of  the investor’s investment in the
Mortgage Credit Fund or the New Issue Fund (together, the “Funds”). Premium Point calculated
the Funds’ valuations—and, in turn, each investor’s share of  each of  the Funds—through the
methodology described below.
B. Premium Point’s Claimed Valuation Methodology
41. In offering memoranda, limited partnership agreements, valuation policies, and other
documents, Premium Point told the Funds’ investors and prospective investors that Premium Point
valued the Funds’ assets in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”).

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42. During at least the Relevant Period, Premium Point claimed that its valuation process
sought to determine the fair value of  the Funds’ portfolio assets and liabilities.
43. Accounting Standards Codification Topic 820 (“Topic 820”), Fair Value
Measurement, provides a framework for determining fair value in accordance with GAAP.
44. Topic 820 defines fair value (with the emphasis in the original) as “the price at which
an orderly transaction to sell the asset or to transfer the liability would take place between market
participants at the measurement date under current market conditions (that is, an exit price at the
measurement date from the perspective of  a market participant that holds the asset or owns the
liability).”
45. Premium Point’s disclosures set forth procedures to determine fair value for the
Funds’ portfolio assets and liabilities.
46. From at least January 2012 to March 2016, Premium Point’s valuation policy
provided the following explanation of  its valuation method for the relevant securities:
Premium Point will query the pricing sources (both securities
dealers and pricing vendors) directly and determine the price as
follows: if  five or more prices are received, the average of  the prices
(excluding the highest and lowest) price will be used as the fair
market value for that security. If  four, three, or two prices are
received, the average of  the prices will be used as the fair market
value for that security. If  one price is received, this price will be
used as the fair market value for that security.

47. Premium Point’s month-end valuation practice from at least January 2012 to March
2016 was to value the Funds’ securities at the midpoint between the bid price and the ask price.
48. During at least this same time period, the Funds’ offering materials—which
Premium Point prepared and distributed to investors—stated that “securities which are not [ ]
listed...shall be valued at the mean between the ‘bid’ and ‘asked’ price on the date of  determination
based on quotations obtained by the Fund or its delegate from one or more brokers or dealers
regularly making markets in and issuing quotations for such securities.”

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49. To value the Funds’ securities during at least this same period, Premium Point
typically used at least one third-party vendor and at least one broker-dealer that Premium Point
traders selected to provide month-end price quotes.
50. Premium Point used the price quotes it received from any such vendor and broker-
dealer to calculate the Funds’ NAVs and report them to investors.
II. Premium Point’s Performance Problems and Target Performance Numbers
51. Before and during the Relevant Period, both the Mortgage Credit Fund and the New
Issue Fund suffered deteriorating performance.
52. Indeed, in July 2015, Majidi told Shor: “We cannot take more NAV hits.”
53. In October 2015, Majidi told Shor, the Trader, and another trader: “The losses we’re
posting are unsustainable. We’re...going to go out of  business.”
54. Also before and during the Relevant Period, certain major investors in the Mortgage
Credit Fund began requesting large redemptions, which would shrink the fund’s size, decrease
Premium Point’s fees, and require Premium Point to sell securities the fund held to satisfy those
redemptions.
55. Throughout at least 2015 and the first quarter of  2016, Ahuja and Majidi estimated
both Funds’ prior month’s performance during the first few days of  the following month.
56. Ahuja and Majidi also analyzed the performance of  competitor funds with
investment strategies similar to that of  the Funds.
57. Ahuja and Majidi wanted the Funds’ performance to track or exceed competitor
funds’ performance.
58. For example, in July 2015, Majidi told Shor: “[W]e need to show performance....
[W]e’re like the bottom third of  hedge funds.”

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59. Similarly, in October 2015, Majidi told Shor: “I mean, if  we show down 3% this
month [in one of  our portfolios], game over.... [The investor] would do a complete redemption.”
60. Before and during the Relevant Period, Ahuja and Majidi received daily profit and
loss figures for the Funds.
61. Ahuja and Majidi created estimates of  the performance they desired for the Funds
for the preceding month and used those to set aggressive performance “targets” for the preceding
month.
62. Ahuja and Majidi then pressured Premium Point traders to meet these targets
through the valuation process described below.
III. Ahuja, Majidi, and Shor Manipulated Premium Point’s Valuation Process
To Meet Performance Targets.

A. Premium Point Used Sham Broker Quotes To Inflate the Funds’ Valuations.
63. Before and during the Relevant Period, Ahuja and Majidi encouraged Shor and the
Trader to seek from friendly brokers inflated price quotations, or “marks,” on bonds that would then
be used to inflate the Funds’ valuations.
64. Shor and the Trader arranged with the Brokerage Firm, through at least its
Representative, to obtain sham marks on bonds.
65. In return, Shor and the Trader promised that Premium Point would send trades to
the Brokerage Firm on which the latter would earn commissions.
66. Late in Premium Point’s monthly valuation process—after Premium Point had
already received price quotes from other broker-dealers or independent pricing services for the
securities in the Funds’ portfolios and once Premium Point had determined the marks needed to
meet Ahuja’s and Majidi’s performance targets—Shor and the Trader told the Representative the
prices they wanted to see for certain bonds in the Funds’ portfolios.

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67. In return, the Brokerage Firm essentially gave Shor and the Trader whatever marks
they wanted for those bonds.
68. For example, in a September 2015 text message, the Representative told Shor that
the Trader needed to send more trades to the Brokerage Firm if  the Trader wanted the
Representative to keep providing sham marks: “[The Trader] gonna have to show me/[Brokerage
Firm] some more love if  he thinks I’m gonna just mark all those bonds where he wants them.”
69. In another text message the same month, the Representative similarly told Shor:
“Tell [the Trader] to chuck me a damn trade if  I keep marking up all his bonds ha.”
70. Similarly, in a conversation with Shor during the Relevant Period, another Premium
Point employee noted that the Brokerage Firm “basically...hold[s] off  sending us marks until we get
an idea of  where our marks are coming in, and then...they give us basically marks w[h]ere we want
them. Same with bid-ask spreads.”
71. In the same conversation, Shor called that practice “very wrong...obviously.”
72. As Defendants knew, Premium Point then used the Brokerage Firm’s sham marks to
value the Funds’ securities.
73. Indeed, the Trader made clear to Ahuja that, to meet the performance target through
the valuation process, he and Shor could get marks on bonds at essentially any price he and Shor
wanted from the friendly broker.
74. Similarly, the Trader told Majidi in a text message that the Representative “can of
course mark bonds anywhere.”
75. Ahuja and Majidi nevertheless encouraged Shor and the Trader to obtain inflated
marks from the Brokerage Firm for valuation purposes.

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B. Premium Point Misused Imputed Mid-Point Prices to Value Portfolios.
1. Premium Point Misled an Investor About Imputed Mid-Point Prices.
76. In approximately September 2011, a large potential fund-of-funds investor
conducted an operational due diligence review on Premium Point and the Mortgage Credit Fund to
decide whether to invest in the Mortgage Credit Fund.
77. The potential investor told Premium Point that it generally sought “a valuation
process [that was] more perfectly independent” from the Premium Point managers of  the Mortgage
Credit Fund to ensure that Premium Point valued the fund appropriately.
78. On September 19, 2011, Premium Point sent the potential investor a draft Pricing
Policy describing Premium Point’s method for valuing the securities in the Funds’ portfolios.
79. That draft policy stated in relevant part: “Pricing will correspond to 3pm mid-market
levels on the last business day of  each month.... In cases where we are given only a bid side price,
the Investment Manager may add one half  of  bid/offer spreads to the bid price to establish a mid-
market price.”
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80. On September 20, 2011, the potential investor’s managing director emailed Premium
Point and inquired (with emphasis added):
Can you strike new language in paragraph 3 that states, ‘In cases
where we are given only a bid side price, the IM may add one half  of
bid/offer spreads to the bid price to establish a mid-market price’?
This is very unusual and we have never seen in a valuation policy before. Our
initial comments were to ask for less manager involvement in valuation process,
not more.... Has this alteration of  broker quotes been occurring all
along? If  so, this was not disclosed during the valuation discussions
with...Amin [Majidi]...?

81. The same day, the Premium Point recipient of  the email forwarded it to Ahuja and
Majidi.

3
 In this context, “offer” price is synonymous with “ask” price.

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82. Later that day, in response to the potential investor’s request, Majidi revised the draft
policy to remove the sentence about adding half  of  the bid/offer spread to the bid price to establish
a mid-point price, or an imputed mid-point. Majidi noted his hope that the revisions were
“acceptable” to the potential investor.
83. The same day, at Majidi’s instruction, Premium Point conveyed the revised proposed
pricing policy to the potential investor.
84. Based on Premium Point’s communications with the potential investor and the
revised pricing policy, the potential investor understood that Premium Point would not use an
imputed mid-point price to value the securities in the Mortgage Credit Fund’s portfolio.
85. In approximately 2012, the potential investor invested more than $100 million with
Premium Point, including in the Mortgage Credit Fund.
86. From that time until at least March 2016, Premium Point’s pricing policy and other
investor documents never disclosed to this investor and to at least most other investors that
Premium Point valued the Funds’ portfolios by deriving imputed mid-point prices through adding
half  of  a bid/ask spread to a bid price.
87. Nevertheless, as Ahuja and Majdi knew, Premium Point continued to use imputed
mid-point prices, including by using bond sector spreads, to value the securities in the Funds’
portfolios from at least 2012 through March 2016, as described below.
2. Premium Point Used Imputed Mid-Point Prices
To Inflate the Funds’ Valuations.
88. Before and during the Relevant Period, Premium Point used several independent,
paid pricing services to price certain securities in the Funds’ portfolios, in addition to obtaining
prices or marks on securities from broker-dealers, for valuation purposes.

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89. From at least January 2012 to February 2016, several independent pricing services
that Premium Point used, including Premium Point’s primary pricing service, provided only bid-side
marks for bonds.
90. To value securities at the midpoint between the bid and ask prices, Premium Point
calculated an imputed mid-point price based on the bid prices it received.
91. Premium Point solicited data from various sources regarding the bid/ask spread in
particular bond sectors or categories (such as Subprime and Prime RMBS 2.0), rather than individual
bonds.
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92. Premium Point then added half  of  the bid/ask spreads for bonds in the
corresponding bond sector to the bid-side prices for the individual bonds in order to impute a mid-
point value for an individual bond.
93. As Ahuja, Majidi, and Shor understood, Premium Point’s imputed mid-point
valuation practice resulted in increasing bond valuations in sectors with wide bid/ask spreads—for
example, spreads often widened due to less liquidity—even when individual bond prices in that
sector were stagnant or declining.
94. The example in paragraphs 95 through 102 below illustrates the imputed mid-point
valuation practice’s overvaluation of  a bond (named SAMI 2006-AR8X) in the Mortgage Credit
Fund’s portfolio for the month ending September 30, 2015.
95. For this bond, Premium Point obtained prices, or marks, from three institutions:
(1) a small broker-dealer registered with the Commission, (2) an independent pricing service
Premium Point used, and (3) the Brokerage Firm.

4
  The “Subprime” category of bonds typically refers to the entire sector of mortgage-backed
securities created from subprime mortgages (generally, borrowers with lower credit ratings), and the
“Prime” category of bonds typically refers to the entire sector of mortgage-backed securities created
from prime mortgages (generally, borrowers with higher credit ratings).

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96. The small broker-dealer provided a mid-point price of  $2.63 for the bond, and the
pricing service provided a bid-side price of  $2.36 for the same bond.
97. The Brokerage Firm—based on the arrangement described above in Section III.A—
provided an inflated bid-side price of  $4.00 for the same bond: almost 70% higher than the bid-side
price Premium Point had received from its pricing service.
98. Premium Point also obtained bid/ask spread data for the bond’s sector (POA IO, or
Payment Option ARM Interest Only) from both the Brokerage Firm and the same small broker-
dealer that had provided a mid-point price on the bond.
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99. The Brokerage Firm provided a bid/ask spread of  $4, and the other small broker-
dealer provided a bid/ask spread of  $3.375.
100. Premium Point next averaged these two bid/ask spreads to arrive at a single bid/ask
spread of  $3.68 for the bond’s sector.
101. Premium Point then used this bid/ask spread to further inflate the bond’s valuation:
First, Premium Point added half  of  the $3.68 bid/ask spread for the bond’s sector (or $1.84) to the
two bid-side prices obtained from the pricing service and the Brokerage Firm. Premium Point
thereby turned the pricing service’s $2.36 bid-price mark into a $4.20 imputed mid-point price and
the Brokerage Firm’s already-inflated $4.00 bid-price mark into a $5.84 imputed mid-point price.
Next, Premium Point averaged together these two imputed mid-point prices—$4.20 and $5.84,
respectively—and the pricing service’s original mid-point price of  $2.63 for the bond. Premium
Point thus valued the bond, for purposes of  investor disclosure and its own management fees, at the
resulting average mid-point price: $4.22.

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  Shor did not tell the Brokerage Firm or the other small broker-dealer that he or Premium
Point would use the bid/ask spreads he obtained from them for valuation purposes. Instead, Shor
suggested in an email to the small broker-dealer that he used the spreads for internal reports at
Premium Point.

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102. Premium Point’s $4.22 valuation for the bond was 60% higher than the mid-point
price from the small broker-dealer and over 78% higher than the bid-side price from the
independent pricing service.
103. The misuse of  sector spreads for purposes of  imputed mid-point valuations became
particularly apparent when Premium Point received actual mid-point price marks on bonds from
brokers, as reflected in the example above.
104. In internal Premium Point communications, Shor described the use of  spreads as a
“big lever” to overvalue the Funds’ portfolios.
105. In one conversation with Majidi in approximately January 2016, Shor said: “I am
overmarked by a bunch of  millions... I am at 3 [dollar spread] on 6 dollar bonds...”
106. In that same conversation with Majidi, Shor made clear that, while bid-side prices for
bonds were falling, Premium Point’s valuations of  the same bonds were rising because of  its
application of  sector spreads to price the bonds.
107. Ahuja similarly knew that Premium Point’s imputed mid-point pricing practice
overvalued bonds in the Funds’ portfolios, based on conversations with at least the Trader and a
former portfolio manager at Premium Point both before and during the Relevant Period.
108. Furthermore, in approximately November 2015, Shor asked the Brokerage Firm and
another broker-dealer to re-label the mid-point price marks they had been providing to Premium
Point on specific bonds as bid-side price marks.
109. This enabled Premium Point to then impute a mid-point price for these bonds—
rather than having to accept the mid-point prices received from both brokerage firms without
adding half  of  a bid/ask sector spread—to increase Premium Point’s valuation for a range of  bonds,
which Shor then did.

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110. In February 2016, Premium Point’s primary pricing service began providing both
bid- and mid-level price marks for the first time.
111. The pricing service’s mid-point price marks were often significantly lower than
Premium Point’s imputed mid-point price marks.
112. For example, for the same bond described above in 95 through 102 but for the
month ending February 29, 2016, the independent pricing service provided Premium Point with a
mid-point price of  $2.61. Yet Premium Point, using an imputed mid-point price, valued the same
bond that month at $6.57—over 2.5 times the pricing service’s mid-point price.
113. At times, Premium Point used bid/ask spreads almost as large as the bid prices
themselves to calculate imputed mid-point prices that Premium Point then used to value the bonds
in the Funds’ portfolios.
114. Also at times, Premium Point’s use of  bid/ask spreads increased the imputed mid-
point prices Premium Point used for valuation even though Premium Point had actually received bid
prices that had declined from the previous month.
115. From at least 2012 through March 2016, Premium Point did not disclose to at least
the vast majority of  the Funds’ investors that it used the imputed mid-point practice described
above to value securities held by the Funds.
C. These Schemes Inflated the Funds’ Valuations and Premium Point’s Fees.
116. Each month during at least the Relevant Period, Premium Point communicated both
its valuation estimates and final month-end NAVs for each of  the Funds to their respective
investors.
117. The schemes described above resulted in Premium Point valuing the Funds’
portfolios materially above their fair value under GAAP during at least the Relevant Period, as
Ahuja, Majidi, and Shor knew or recklessly disregarded.

19

118. Because the schemes described above inflated the Funds’ NAVs, Premium Point
charged inflated fees to the Funds during at least the Relevant Period.
D. Premium Point Used Inflated Valuations to Try to Raise Investor Money for a
New Fund and Stem Redemptions.
119. In 2015, Ahuja tried to raise money from investors for a second version of  the New
Issue Fund.
120. Ahuja wanted to show potential investors that the New Issue Fund had a positive
performance track record.
121. During 2015, Ahuja pressured the Trader to inflate the New Issue Fund’s valuations.
122. Ahuja used the New Issue Fund’s inflated valuations to market the new fund (which
ultimately failed to materialize) to prospective investors.
123. In mid- to late 2015, Premium Point needed to raise cash by selling some securities
in the Mortgage Credit Fund because of  large investor redemptions from the fund.
124. During that same time, at least partly because Premium Point had overvalued
securities in the Mortgage Credit Fund, Premium Point sold many securities held by that fund at
prices significantly below Premium Point’s valuation of  the same securities.
125. Premium Point ran an internal price variance report showing the Funds’ actual trades
versus Premium Point’s valuations of  the same securities.
126. Majidi did not want Shor to sell certain securities because the transactions would
appear on the price variance report.
127. Ahuja and Majidi communicated with Shor about the prices at which Premium Point
was selling securities and the expected losses for future sales when compared to Premium Point’s
higher valuations for those same securities.
128. In essence, Ahuja, Majidi, and Shor discussed the extent of  Premium Point’s
overvaluation of  securities and its impact on Premium Point’s performance.

20

129.  To deter investors from submitting additional redemption requests, Ahuja and
Majidi set even higher, unrealistic performance targets for the Mortgage Credit Fund and continued
to pressure the Trader and Shor to inflate valuations.
130. During at least the Relevant Period, while the Mortgage Credit Fund sustained
significant redemptions, it continued to receive additional investor funds through subscriptions.
IV. The Scheme Collapsed, and Premium Point Materially Revised Values Downwards.

131. In approximately April 2016, during its audit of  the Funds’ 2015 year-end financial
statements, the Funds’ auditor became concerned that Premium Point had significantly overstated
the Funds’ valuations and began a review.
132. In April 2016, Premium Point informed the Funds’ investors that it intended to
restate NAVs for late 2015 and later periods.
133. Premium Point ultimately revised its valuation figures for the Relevant Period and
determined that, at least during that period, the Funds had been overvalued.
134. Based on Premium Point’s revised valuation figures, Premium Point had overvalued
each of  the Funds monthly by over 14% on average during the Relevant Period.
135. For example, for the month ending December 31, 2015, Premium Point determined
that the Mortgage Credit Fund had been overvalued by over $50 million and the New Issue Fund
had been overvalued by $40 million.
136. Indeed, for that same month, Premium Point had overvalued the bond described in
95 through 102 above (among many others) by more than $7 million, both by using a sham, inflated
bid-side price from the Brokerage Firm and imputing a mid-point price using a bid/ask sector
spread.

21

137. Ultimately, for fiscal years 2015 and 2016, Premium Point failed to obtain any annual
audit of  the Funds (much less an annual audit by an independent public accountant registered with
and subject to regular inspection by the Public Company Accounting Oversight Board (“PCAOB”)).
138. Nor did Premium Point obtain an annual surprise examination of  the Funds by an
independent public accountant for fiscal years 2015 or 2016.
139. Premium Point further failed to distribute audited financial statements to the Funds’
investors for fiscal years 2015 and 2016.
FIRST CLAIM FOR RELIEF
Violations of  Exchange Act Section 10(b) and Rules 10b-5(a) and (c) Thereunder
(All Defendants)

140. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.
141. Defendants, directly or indirectly, singly or in concert, in connection with the
purchase or sale of  securities and by use of  the means or instrumentalities of  interstate commerce,
or of  the mails, or of  the facilities of  a national securities exchange, knowingly or recklessly have:
(i) employed devices, schemes, or artifices to defraud or (ii) engaged in acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon other persons.
142. By reason of  the foregoing, Defendants, directly or indirectly, singly or in concert,
have each violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C.
§ 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)].
SECOND CLAIM FOR RELIEF
Violations of  Securities Act Section 17(a)(1) and (3)
(All Defendants)

143. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.

22

144. Defendants, directly or indirectly, singly or in concert, in the offer or sale of
securities and by use of  the means or instruments of  transportation or communication in interstate
commerce or the mails, knowingly or recklessly have: (i) employed devices, schemes or artifices to
defraud or (ii) engaged in transactions, practices, or courses of  business which operated or would
operate as a fraud or deceit upon purchasers of  securities.
145. By reason of  the foregoing, Defendants, directly or indirectly, singly or in concert,
have violated and, unless enjoined, will again violate Securities Act Sections 17(a)(1) and (3) [15
U.S.C. §§ 77q(a)(1) and (3)].
THIRD CLAIM FOR RELIEF
Violations of  Advisers Act Sections 206(1) and (2)
(Premium Point, Ahuja, and Majidi)

146. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.
147. At all relevant times, defendants Premium Point, Ahuja, and Majidi were investment
advisers under Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)].
148. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as
investment advisers, by use of  the mails or the means and instrumentalities of  interstate commerce,
have: (i) knowingly or recklessly employed devices, schemes, or artifices to defraud clients or
prospective clients, and/or (ii) knowingly, recklessly, or negligently engaged in transactions, practices,
and courses of  business which operated or would have operated as a fraud or deceit upon clients or
prospective clients.
149. By reason of  the foregoing, Defendants Premium Point, Ahuja, and Majidi, directly
or indirectly, singly or in concert, have violated and, unless enjoined, will again violate Advisers Act
Sections 206(1) and (2) [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

23

FOURTH CLAIM FOR RELIEF
Violations of  Advisers Act Section 206(4) and Rule 206(4)-8(a)(2) Thereunder
(Premium Point, Ahuja, and Majidi)

150. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.
151. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as
investment advisers to a pooled investment vehicle, knowingly, recklessly, or negligently engaged in
acts, practices, or courses of  business which were fraudulent, deceptive, or manipulative, with
respect to an investor or prospective investor in the pooled investment vehicle.
152. By reason of  the foregoing, Defendants Premium Point, Ahuja, and Majidi, directly
or indirectly, singly or in concert, have violated and, unless enjoined, will again violate Advisers Act
Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-
8(a)(2)].
FIFTH CLAIM FOR RELIEF
Aiding and Abetting Violations of  Advisers Act Sections 206(1) and (2)
(Ahuja, Majidi, and Shor)

153. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.
154. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as
investment advisers, by use of  the mails or the means and instrumentalities of  interstate commerce,
have: (i) knowingly or recklessly employed devices, schemes, or artifices to defraud clients or
prospective clients, and/or (ii) knowingly, recklessly, or negligently engaged in transactions, practices,
and courses of  business which operated or would have operated as a fraud or deceit upon clients or
prospective clients.
155. By reason of  the foregoing, Ahuja and Majidi, directly or indirectly, singly or in
concert, aided and abetted Premium Point’s violations of  Advisers Act Sections 206(1) and (2) [15

24

U.S.C. §§ 80b- 6(1) and 80b-6(2)] by knowingly or recklessly providing substantial assistance to
Premium Point’s violations, and Shor, directly or indirectly, singly or in concert, aided and abetted
Premium Point’s, Ahuja’s, and/or Majidi’s violations of  Advisers Act Sections 206(1) and (2) [15
U.S.C. §§ 80b- 6(1) and 80b-6(2)] by knowingly or recklessly providing substantial assistance to
Premium Point’s, Ahuja’s, and/or Majidi’s violations.
SIXTH CLAIM FOR RELIEF
Aiding and Abetting Violations of  Advisers Act Section 206(4) and Rule 206(4)-8(a)(2)
(Ahuja, Majidi, and Shor)
156. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein
157. Premium Point, Ahuja, and Majidi, while acting as investment advisers to a pooled
investment vehicle, knowingly, recklessly or negligently engaged in acts, practices or courses of
business which are fraudulent, deceptive, or manipulative with respect to an investor or prospective
investor in the pooled investment vehicle.
158. By reason of  the foregoing, Ahuja and Majidi, directly or indirectly, singly or in
concert, aided and abetted Premium Point’s violations of  Advisers Act Section 206(4) [15 U.S.C.
§ 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)] by knowingly or
recklessly providing substantial assistance to Premium Point’s violations, and Shor, directly or
indirectly, singly or in concert, aided and abetted Premium Point’s, Ahuja’s, and/or Majidi’s violations
of  Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R.
§ 275.206(4)-8(a)(2)] by knowingly or recklessly providing substantial assistance to Premium Point’s,
Ahuja’s, and/or Majidi’s violations.

25

SEVENTH CLAIM FOR RELIEF
Violations of  Advisers Act Section 206(4) and Rule 206(4)-2 thereunder
(Premium Point)
159. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set
forth herein.
160. Premium Point, an investment adviser registered with the Commission at all relevant
times, had custody of  the Funds’ assets under the definition set forth in Rule 206(4)-2(d)(2) [17
C.F.R. § 275.206(4)-2(d)(2)].
161. For fiscal years 2015 and 2016, Premium Point (a) failed to obtain an annual audit of
the Funds by an independent public accountant registered with and subject to regular inspection by
the PCAOB, (b) failed to obtain a surprise examination of  the Funds by an independent public
accountant, and (c) failed to distribute audited financial statements to Fund investors within 120 days
of  the end of  the Funds’ fiscal years.
162. By reason of  the foregoing, Premium Point, directly or indirectly, has violated and
unless enjoined will again violate Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-
2 thereunder [17 C.F.R. § 275.206(4)-2].
PRAYER FOR RELIEF
            WHEREFORE, the Commission respectfully requests the Court enter a Final Judgment:
I.
Permanently enjoining Premium Point and its officers, agents, servants, employees and
attorneys and all persons in active concert or participation with any of them from violating, directly
or indirectly, Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17
C.F.R. §§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1)
and (3)]; Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and

26

Rules 206(4)-2 [17 C.F.R. § 275.206(4)-2] and 206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)]
thereunder;
II.
Permanently enjoining Ahuja and his agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)];
Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule
206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder;
III.
Permanently enjoining Majidi and his agents, servants, employees and attorneys and all
persons in active concert or participation with any of  them from violating, directly or indirectly,
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)];
Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule
206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder;
IV.
Permanently enjoining Shor and his agents, servants, employees and attorneys and all
persons in active concert or participation with any of  them from violating, directly or indirectly,
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)];
Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule
206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder;

27

V.
Ordering Defendants to disgorge all ill-gotten gains they received directly or indirectly, with
prejudgment interest thereon, as a result of  the alleged violations;
VI.
Ordering Defendants to pay civil money penalties under Securities Act Section 20(d) [15
U.S.C. § 77t(d)], Exchange Act Section 21(d) [15 U.S.C. § 78u(d)(3)], and Advisers Act Section 209(e)
[15 U.S.C. § 80b-9(e)];

Daniel Michael 
C. Dabney O’Riordan* 
Mark D. Salzberg 
Preethi Krishnamurthy  
Osman Nawaz*  
H. Gregory Baker 
Attorneys for the Plaintiff   
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office  
Brookfield Place 
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(212) 336-0116 (Krishnamurthy) 
*Not admitted in U.S. District Court for the S.D.N.Y. 
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff,  

-against- 

PREMIUM POINT INVESTMENTS LP,  
ANILESH AHUJA a/k/a NEIL AHUJA, 
AMIN MAJIDI, and JEREMY SHOR,  

Defendants. 

 

COMPLAINT 

18 Civ. ___ (      ) 
 
 
JURY TRIAL DEMANDED 

 
 Plaintiff  Securities and Exchange Commission (the “Commission”), for its Complaint 

against defendants Premium Point Investments L.P. (“Premium Point”), Anilesh Ahuja a/k/a Neil 

Ahuja (“Ahuja”), Amin Majidi (“Majidi”), and Jeremy Shor (“Shor”) (together, “Defendants”), 

alleges as follows:   

SUMMARY 

1. Defendant Premium Point, a Commission-registered investment adviser that 

managed billions of  dollars in assets at its height, and the individual defendants engaged in a 

fraudulent scheme to inflate the value of  securities—at times by more than 100%—held by several 

private investment funds Premium Point advised.  

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2 
 

2. From at least September 2015 through March 2016 (the “Relevant Period”), 

Premium Point investment funds’ performance was deteriorating and some of  the funds’ major 

investors were requesting large redemptions from the funds.  

3. Ahuja, Premium Point’s majority owner and chief  executive officer, and Majidi, the 

portfolio manager of  one Premium Point investment fund, sought to hide the funds’ poor 

performance, both to stem redemptions and to persuade investors to invest in a new Premium Point 

fund, by inflating the value of  securities in the Premium Point funds.   

4. Pressured by Ahuja and Majidi, Shor—a Premium Point trader—and another 

Premium Point trader (the “Trader”) relied on two “levers” to inflate the values of  securities held by 

the investment funds.   

5. First, Shor and the Trader, with Ahuja’s and Majidi’s knowledge, obtained inflated 

price quotes on securities, or “marks,” from at least one friendly registered representative (the 

“Representative”) of  a brokerage firm (the “Brokerage Firm”).  

6. In return, Shor and the Trader promised to send securities trades to the Brokerage 

Firm for which it would earn commissions. 

7. Premium Point then used these inflated price “marks” to calculate and report the 

funds’ monthly valuations to investors.   

8. Second, Shor and the Trader, again with Ahuja’s and Majidi’s knowledge, used 

“imputed” mid-point prices to inflate the values of  the funds’ securities.   

9. As Premium Point generally disclosed to investors, it used the mid-point price of  

each security—a price halfway between the bid price, the highest price at which a prospective buyer 

is willing to buy the security, and the ask price, the lowest price at which a prospective seller is willing 

to sell the security—in the funds’ portfolios to value the investment funds.  

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3 
 

10. Unbeknownst to at least most investors, Premium Point itself  routinely derived, or 

“imputed,” the mid-point prices of  securities, even where Premium Point could easily obtain a mid-

point price for the security from a broker. To do so, Premium Point took a bid price for a particular 

security and added half  the spread between the bid and ask prices on a broad sector of  securities—

not the spread on that particular security—to “impute” a mid-point price for that security.  

11. As Ahuja, Majidi, and Shor knew, this “imputed” mid-point practice routinely and 

significantly inflated the values of  securities in the funds’ portfolios, particularly during the Relevant 

Period.   

12. Indeed, in September 2011, a large potential fund-of-funds investor, contemplating 

investing in one of  the funds, received a draft of  a new Premium Point pricing policy. The policy 

disclosed that Premium Point would use an imputed mid-point price to value securities in that fund. 

13. The potential investor told Premium Point—in a communication conveyed to both 

Ahuja and Majidi—that the investor would not invest in the fund if  Premium Point valued the 

fund’s portfolio using imputed mid-point prices because that practice would give Premium Point too 

much discretion in the valuation process.  

14. At the investor’s insistence, Majidi removed the imputed mid-point provision from 

Premium Point’s draft pricing policy and never included it in any final pricing or valuation policy, 

and the investor subsequently invested a substantial amount in a Premium Point fund.  

15. Nevertheless, as Ahuja and Majidi knew, Premium Point continued to use imputed 

mid-point prices to value the funds for years, including throughout the Relevant Period, without 

telling that investor and at least most other investors.   

16. The Defendants’ fraudulent valuation scheme resulted in Premium Point’s reporting 

inflated month-end net asset values (“NAVs”) and inflated month-end and annual performance for 

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4 
 

the funds to existing and potential investors. These inflated valuations enabled Premium Point to 

receive excess fees.  

17. Ahuja and Majidi knowingly relied on the funds’ inflated performance to deter 

investor redemptions and raise additional investor money for the funds.   

18. Ahuja further knowingly relied on the inflated performance figures for one of  the 

funds to try to persuade investors to invest in a second version of  that fund (which ultimately failed 

to materialize).  

19. The fraudulent scheme eventually collapsed as Premium Point faced difficulties in 

meeting investors’ redemptions because it could not sell securities in the funds’ portfolios at the 

inflated valuation prices and as the funds’ auditor questioned Premium Point’s valuations.  

20. Premium Point later revised the valuation of  the funds’ securities for the Relevant 

Period and determined that it had previously overvalued the funds. Based on the revised valuations, 

Premium Point had overvalued the funds by an average of  over 14% per month during the Relevant 

Period.  

VIOLATIONS 

21. By virtue of  the foregoing conduct and as alleged further herein: 

(a) Defendants violated Section 10(b) of  the Securities Exchange Act of  1934 (the 

“Exchange Act”) [15 U.S.C. § 78j(b)], Rule 10b-5(a) and (c) thereunder [17 C.F.R. 

§§ 240.10b-5(a) and (c)], and Sections 17(a)(1) and (3) of  the Securities Act of  

1933 (“Securities Act”) [15 U.S.C. § 77q(a)(1) & (3)];  

(b) Premium Point, Ahuja, and Majidi violated Sections 206(1), 206(2) and 206(4) of  

the Investment Advisers Act of  1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1), 

80b-6(2) & 80b-6(4)], and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-

8(a)(2)];  

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5 
 

(c) Premium Point violated Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and 

Rule 206(4)-2 thereunder [17 C.F.R. § 275.206(4)-2];  

(d) Ahuja and Majidi aided and abetted Premium Point’s violations of  Advisers Act 

Sections 206(1), 206(2), and 206(4) [15 U.S.C. § 80b-6(1), 80b-6(2) & 80b-6(4)], 

and Rule 206(4)-8(a)(2)thereunder [17 C.F.R. § 275.206(4)-8(a)(2)]; and  

(e) Shor aided and abetted Premium Point’s, Ahuja’s, and Majidi’s violations of  

Advisers Act Sections 206(1), 206(2), and 206(4) [15 U.S.C. § 80b-6(1), 80b-6(2) 

& 80b-6(4)], and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)].    

22. Unless Defendants are permanently restrained and enjoined, they will again engage 

in the transactions, acts, practices, and courses of  business set forth in this Complaint or in 

transactions, acts, practices, and courses of  business of  similar type and object. 

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

23. The Commission brings this action pursuant to authority conferred upon it by 

Securities Act Section 20(b) [15 U.S.C. § 77t(b)], Exchange Act Section 21(d) [15 U.S.C. § 78u(d)], 

and Advisers Act Section 209(d) [15 U.S.C. § 80b-9(d)]. The Commission seeks a final judgment: 

(i) permanently enjoining Defendants from violating the federal securities laws and rules this 

Complaint alleges they have violated; (ii) requiring Defendants to disgorge all ill-gotten gains, 

together with prejudgment interest, received as a result of  their violations; (iii) requiring Defendants 

to pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange 

Act Section 21(d) [15 U.S.C. § 78u(d)], and Advisers Act Section 209 [15 U.S.C. § 80b-9]; and 

(iv) ordering any other relief  the Court may deem just and appropriate.     

  

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6 
 

JURISDICTION AND VENUE 

24. This Court has jurisdiction over this action under Securities Act Section 22(a) [15 

U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 

U.S.C. § 80b-14].   

25. Defendants have, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce or of the mails, in connection with the transactions, acts, practices, and courses 

of business alleged in this Complaint.  

26. Venue lies in this District under Securities Act Section 22(a) [15 US.C. § 77v(a)], 

Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-1].  

Defendants may be found in, are inhabitants of, or transact business in this District, and certain of  

the acts, practices, transactions, and courses of  business alleged in this Complaint occurred within 

the Southern District of  New York, where Premium Point had its office during the Relevant Period.   

DEFENDANTS  

27. Premium Point, a Delaware limited partnership that Ahuja founded in 2008, is an 

investment adviser that has been registered with the Commission from April 2009 through at least 

April 2018, and with its principal place of  business in New York, New York. From at least 2009 

through 2017, Premium Point and/or its affiliates had custody of  the assets of  the investment funds 

that Premium Point advised based on access to the funds’ securities.  

28. Ahuja, age 49, resides in New York, New York. Ahuja founded Premium Point and 

at all relevant times was its chief  executive officer, chief  investment officer, and majority owner.   

29. Majidi, age 51, resides in New York, New York. From November 2008 to June 

2016, Premium Point employed Majidi, initially as its chief  risk officer and, beginning in 2015, as the 

portfolio manager of  one Premium Point fund. Majidi received a percentage of  Premium Point’s net 

annual income and any incentive fees.   

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7 
 

30. Shor, age 45, resides in New York, New York. From the spring of  2014 until he 

resigned in March 2016, Shor served as a director and trader of  non-agency securities at Premium 

Point.1    

OTHER RELEVANT INDIVIDUALS AND ENTITIES 

31. The Trader worked for Premium Point before, during, and after the Relevant 

Period, first in risk management and later as an associate director and trader of  asset-backed 

securities.   

32. The Representative served as a registered representative of  the Brokerage Firm 

from May 2015 through approximately September 2015 and from October 2016 to April 2017. 

33. The Brokerage Firm is a small, regional broker-dealer that was registered with the 

Commission at all relevant times.  

34. Premium Point Master Mortgage Credit Fund, Ltd. and Premium Point 

Offshore Mortgage Credit Fund, Ltd.—each incorporated in the Cayman Islands and currently in 

voluntary liquidation proceedings there—and Premium Point Mortgage Credit Fund LP, 

incorporated in Delaware, are a group of  unregistered funds (collectively, the “Mortgage Credit 

Fund”), organized in a master-feeder structure.2  

35. Premium Point Master New Issue Opportunity Fund, Ltd. and Premium 

Point Offshore New Issue Opportunity Fund, Ltd.—each incorporated in the Cayman Islands 

and currently in voluntary liquidation proceedings there—and Premium Point New Issue 

                                                 
1  “Non-agency” means that a government-sponsored enterprise, such as the Federal National 
Mortgage Association (known as Fannie Mae), did not guarantee the securities.  
2  A “master-feeder structure” is a two-tiered structure in which investors invest their capital in 
a “feeder” fund, which in turn invests in a “master” fund, managed by the same investment adviser 
(or an affiliate), that buys and sells the assets. 

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Opportunity Fund LP, incorporated in Delaware, are a group of  unregistered funds (collectively, 

the “New Issue Fund”), organized in a master-feeder structure.  

FACTS 
 
I. Background 
 

A. Premium Point and the Funds  
 

36. During the Relevant Period, Premium Point described itself  as “focused on 

investment opportunities in securities, mortgages, loans, real property, as well as[ ] consumer 

receivables.”    

37. At all relevant times, the Mortgage Credit Fund invested in mortgage securities, 

including subprime and interest-only non-agency bonds.  

38. At all relevant times, the New Issue Fund invested in mortgage securities, including 

new-issue prime jumbo residential mortgage bonds.      

39. Premium Point received fees for its advisory services, partly based on the value of  

the assets in the funds it managed according to the fund valuations it provided.      

40. For example, on a quarterly basis, Premium Point received a management fee from 

each non-affiliated investor equal to 1.5% per annum of  the value of  the investor’s investment in the 

Mortgage Credit Fund or the New Issue Fund (together, the “Funds”). Premium Point calculated 

the Funds’ valuations—and, in turn, each investor’s share of  each of  the Funds—through the 

methodology described below. 

B. Premium Point’s Claimed Valuation Methodology  

41. In offering memoranda, limited partnership agreements, valuation policies, and other 

documents, Premium Point told the Funds’ investors and prospective investors that Premium Point 

valued the Funds’ assets in accordance with U.S. Generally Accepted Accounting Principles 

(“GAAP”).   

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42. During at least the Relevant Period, Premium Point claimed that its valuation process 

sought to determine the fair value of  the Funds’ portfolio assets and liabilities.   

43. Accounting Standards Codification Topic 820 (“Topic 820”), Fair Value 

Measurement, provides a framework for determining fair value in accordance with GAAP.   

44. Topic 820 defines fair value (with the emphasis in the original) as “the price at which 

an orderly transaction to sell the asset or to transfer the liability would take place between market 

participants at the measurement date under current market conditions (that is, an exit price at the 

measurement date from the perspective of  a market participant that holds the asset or owns the 

liability).”   

45. Premium Point’s disclosures set forth procedures to determine fair value for the 

Funds’ portfolio assets and liabilities.   

46. From at least January 2012 to March 2016, Premium Point’s valuation policy 

provided the following explanation of  its valuation method for the relevant securities:  

Premium Point will query the pricing sources (both securities 
dealers and pricing vendors) directly and determine the price as 
follows: if  five or more prices are received, the average of  the prices 
(excluding the highest and lowest) price will be used as the fair 
market value for that security. If  four, three, or two prices are 
received, the average of  the prices will be used as the fair market 
value for that security. If  one price is received, this price will be 
used as the fair market value for that security.    

 
47. Premium Point’s month-end valuation practice from at least January 2012 to March 

2016 was to value the Funds’ securities at the midpoint between the bid price and the ask price.    

48. During at least this same time period, the Funds’ offering materials—which 

Premium Point prepared and distributed to investors—stated that “securities which are not [ ] 

listed…shall be valued at the mean between the ‘bid’ and ‘asked’ price on the date of  determination 

based on quotations obtained by the Fund or its delegate from one or more brokers or dealers 

regularly making markets in and issuing quotations for such securities.”   

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49. To value the Funds’ securities during at least this same period, Premium Point 

typically used at least one third-party vendor and at least one broker-dealer that Premium Point 

traders selected to provide month-end price quotes.  

50. Premium Point used the price quotes it received from any such vendor and broker-

dealer to calculate the Funds’ NAVs and report them to investors.   

II. Premium Point’s Performance Problems and Target Performance Numbers 

51. Before and during the Relevant Period, both the Mortgage Credit Fund and the New 

Issue Fund suffered deteriorating performance.  

52. Indeed, in July 2015, Majidi told Shor: “We cannot take more NAV hits.” 

53. In October 2015, Majidi told Shor, the Trader, and another trader: “The losses we’re 

posting are unsustainable. We’re…going to go out of  business.”   

54. Also before and during the Relevant Period, certain major investors in the Mortgage 

Credit Fund began requesting large redemptions, which would shrink the fund’s size, decrease 

Premium Point’s fees, and require Premium Point to sell securities the fund held to satisfy those 

redemptions.   

55. Throughout at least 2015 and the first quarter of  2016, Ahuja and Majidi estimated 

both Funds’ prior month’s performance during the first few days of  the following month.  

56. Ahuja and Majidi also analyzed the performance of  competitor funds with 

investment strategies similar to that of  the Funds.   

57. Ahuja and Majidi wanted the Funds’ performance to track or exceed competitor 

funds’ performance.  

58. For example, in July 2015, Majidi told Shor: “[W]e need to show performance…. 

[W]e’re like the bottom third of  hedge funds.” 

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59. Similarly, in October 2015, Majidi told Shor: “I mean, if  we show down 3% this 

month [in one of  our portfolios], game over…. [The investor] would do a complete redemption.”  

60. Before and during the Relevant Period, Ahuja and Majidi received daily profit and 

loss figures for the Funds.  

61. Ahuja and Majidi created estimates of  the performance they desired for the Funds 

for the preceding month and used those to set aggressive performance “targets” for the preceding 

month.   

62. Ahuja and Majidi then pressured Premium Point traders to meet these targets 

through the valuation process described below.    

III. Ahuja, Majidi, and Shor Manipulated Premium Point’s Valuation Process  
To Meet Performance Targets. 
 
A. Premium Point Used Sham Broker Quotes To Inflate the Funds’ Valuations. 

63. Before and during the Relevant Period, Ahuja and Majidi encouraged Shor and the 

Trader to seek from friendly brokers inflated price quotations, or “marks,” on bonds that would then 

be used to inflate the Funds’ valuations.  

64. Shor and the Trader arranged with the Brokerage Firm, through at least its 

Representative, to obtain sham marks on bonds.  

65. In return, Shor and the Trader promised that Premium Point would send trades to 

the Brokerage Firm on which the latter would earn commissions.  

66. Late in Premium Point’s monthly valuation process—after Premium Point had 

already received price quotes from other broker-dealers or independent pricing services for the 

securities in the Funds’ portfolios and once Premium Point had determined the marks needed to 

meet Ahuja’s and Majidi’s performance targets—Shor and the Trader told the Representative the 

prices they wanted to see for certain bonds in the Funds’ portfolios.  

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67. In return, the Brokerage Firm essentially gave Shor and the Trader whatever marks 

they wanted for those bonds.   

68. For example, in a September 2015 text message, the Representative told Shor that 

the Trader needed to send more trades to the Brokerage Firm if  the Trader wanted the 

Representative to keep providing sham marks: “[The Trader] gonna have to show me/[Brokerage 

Firm] some more love if  he thinks I’m gonna just mark all those bonds where he wants them.”  

69. In another text message the same month, the Representative similarly told Shor: 

“Tell [the Trader] to chuck me a damn trade if  I keep marking up all his bonds ha.”  

70. Similarly, in a conversation with Shor during the Relevant Period, another Premium 

Point employee noted that the Brokerage Firm “basically…hold[s] off  sending us marks until we get 

an idea of  where our marks are coming in, and then…they give us basically marks w[h]ere we want 

them. Same with bid-ask spreads.”  

71. In the same conversation, Shor called that practice “very wrong…obviously.”   

72. As Defendants knew, Premium Point then used the Brokerage Firm’s sham marks to 

value the Funds’ securities. 

73. Indeed, the Trader made clear to Ahuja that, to meet the performance target through 

the valuation process, he and Shor could get marks on bonds at essentially any price he and Shor 

wanted from the friendly broker.  

74. Similarly, the Trader told Majidi in a text message that the Representative “can of  

course mark bonds anywhere.”  

75. Ahuja and Majidi nevertheless encouraged Shor and the Trader to obtain inflated 

marks from the Brokerage Firm for valuation purposes.  

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B. Premium Point Misused Imputed Mid-Point Prices to Value Portfolios. 

1. Premium Point Misled an Investor About Imputed Mid-Point Prices. 

76. In approximately September 2011, a large potential fund-of-funds investor 

conducted an operational due diligence review on Premium Point and the Mortgage Credit Fund to 

decide whether to invest in the Mortgage Credit Fund.  

77. The potential investor told Premium Point that it generally sought “a valuation 

process [that was] more perfectly independent” from the Premium Point managers of  the Mortgage 

Credit Fund to ensure that Premium Point valued the fund appropriately.  

78. On September 19, 2011, Premium Point sent the potential investor a draft Pricing 

Policy describing Premium Point’s method for valuing the securities in the Funds’ portfolios.  

79. That draft policy stated in relevant part: “Pricing will correspond to 3pm mid-market 

levels on the last business day of  each month…. In cases where we are given only a bid side price, 

the Investment Manager may add one half  of  bid/offer spreads to the bid price to establish a mid-

market price.”3   

80. On September 20, 2011, the potential investor’s managing director emailed Premium 

Point and inquired (with emphasis added):  

Can you strike new language in paragraph 3 that states, ‘In cases 
where we are given only a bid side price, the IM may add one half  of  
bid/offer spreads to the bid price to establish a mid-market price’?  
This is very unusual and we have never seen in a valuation policy before. Our 
initial comments were to ask for less manager involvement in valuation process, 
not more…. Has this alteration of  broker quotes been occurring all 
along? If  so, this was not disclosed during the valuation discussions 
with…Amin [Majidi]…?   

 
81. The same day, the Premium Point recipient of  the email forwarded it to Ahuja and 

Majidi.   
                                                 
3  In this context, “offer” price is synonymous with “ask” price.  

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82. Later that day, in response to the potential investor’s request, Majidi revised the draft 

policy to remove the sentence about adding half  of  the bid/offer spread to the bid price to establish 

a mid-point price, or an imputed mid-point. Majidi noted his hope that the revisions were 

“acceptable” to the potential investor.  

83. The same day, at Majidi’s instruction, Premium Point conveyed the revised proposed 

pricing policy to the potential investor.  

84. Based on Premium Point’s communications with the potential investor and the 

revised pricing policy, the potential investor understood that Premium Point would not use an 

imputed mid-point price to value the securities in the Mortgage Credit Fund’s portfolio.  

85. In approximately 2012, the potential investor invested more than $100 million with 

Premium Point, including in the Mortgage Credit Fund.  

86. From that time until at least March 2016, Premium Point’s pricing policy and other 

investor documents never disclosed to this investor and to at least most other investors that 

Premium Point valued the Funds’ portfolios by deriving imputed mid-point prices through adding 

half  of  a bid/ask spread to a bid price.   

87. Nevertheless, as Ahuja and Majdi knew, Premium Point continued to use imputed 

mid-point prices, including by using bond sector spreads, to value the securities in the Funds’ 

portfolios from at least 2012 through March 2016, as described below.  

2. Premium Point Used Imputed Mid-Point Prices  
To Inflate the Funds’ Valuations. 

88. Before and during the Relevant Period, Premium Point used several independent, 

paid pricing services to price certain securities in the Funds’ portfolios, in addition to obtaining 

prices or marks on securities from broker-dealers, for valuation purposes.  

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89. From at least January 2012 to February 2016, several independent pricing services 

that Premium Point used, including Premium Point’s primary pricing service, provided only bid-side 

marks for bonds.   

90. To value securities at the midpoint between the bid and ask prices, Premium Point 

calculated an imputed mid-point price based on the bid prices it received.   

91. Premium Point solicited data from various sources regarding the bid/ask spread in 

particular bond sectors or categories (such as Subprime and Prime RMBS 2.0), rather than individual 

bonds.4   

92. Premium Point then added half  of  the bid/ask spreads for bonds in the 

corresponding bond sector to the bid-side prices for the individual bonds in order to impute a mid-

point value for an individual bond.     

93. As Ahuja, Majidi, and Shor understood, Premium Point’s imputed mid-point 

valuation practice resulted in increasing bond valuations in sectors with wide bid/ask spreads—for 

example, spreads often widened due to less liquidity—even when individual bond prices in that 

sector were stagnant or declining.  

94. The example in paragraphs 95 through 102 below illustrates the imputed mid-point 

valuation practice’s overvaluation of  a bond (named SAMI 2006-AR8X) in the Mortgage Credit 

Fund’s portfolio for the month ending September 30, 2015.  

95. For this bond, Premium Point obtained prices, or marks, from three institutions: 

(1) a small broker-dealer registered with the Commission, (2) an independent pricing service 

Premium Point used, and (3) the Brokerage Firm.  
                                                 
4  The “Subprime” category of bonds typically refers to the entire sector of mortgage-backed 
securities created from subprime mortgages (generally, borrowers with lower credit ratings), and the 
“Prime” category of bonds typically refers to the entire sector of mortgage-backed securities created 
from prime mortgages (generally, borrowers with higher credit ratings).     

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96. The small broker-dealer provided a mid-point price of  $2.63 for the bond, and the 

pricing service provided a bid-side price of  $2.36 for the same bond.  

97. The Brokerage Firm—based on the arrangement described above in Section III.A—

provided an inflated bid-side price of  $4.00 for the same bond: almost 70% higher than the bid-side 

price Premium Point had received from its pricing service.  

98. Premium Point also obtained bid/ask spread data for the bond’s sector (POA IO, or 

Payment Option ARM Interest Only) from both the Brokerage Firm and the same small broker-

dealer that had provided a mid-point price on the bond.5   

99. The Brokerage Firm provided a bid/ask spread of  $4, and the other small broker-

dealer provided a bid/ask spread of  $3.375.  

100. Premium Point next averaged these two bid/ask spreads to arrive at a single bid/ask 

spread of  $3.68 for the bond’s sector.  

101. Premium Point then used this bid/ask spread to further inflate the bond’s valuation: 

First, Premium Point added half  of  the $3.68 bid/ask spread for the bond’s sector (or $1.84) to the 

two bid-side prices obtained from the pricing service and the Brokerage Firm. Premium Point 

thereby turned the pricing service’s $2.36 bid-price mark into a $4.20 imputed mid-point price and 

the Brokerage Firm’s already-inflated $4.00 bid-price mark into a $5.84 imputed mid-point price. 

Next, Premium Point averaged together these two imputed mid-point prices—$4.20 and $5.84, 

respectively—and the pricing service’s original mid-point price of  $2.63 for the bond. Premium 

Point thus valued the bond, for purposes of  investor disclosure and its own management fees, at the 

resulting average mid-point price: $4.22.  
                                                 
5  Shor did not tell the Brokerage Firm or the other small broker-dealer that he or Premium 
Point would use the bid/ask spreads he obtained from them for valuation purposes. Instead, Shor 
suggested in an email to the small broker-dealer that he used the spreads for internal reports at 
Premium Point.            

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102. Premium Point’s $4.22 valuation for the bond was 60% higher than the mid-point 

price from the small broker-dealer and over 78% higher than the bid-side price from the 

independent pricing service.  

103. The misuse of  sector spreads for purposes of  imputed mid-point valuations became 

particularly apparent when Premium Point received actual mid-point price marks on bonds from 

brokers, as reflected in the example above.  

104. In internal Premium Point communications, Shor described the use of  spreads as a 

“big lever” to overvalue the Funds’ portfolios.  

105. In one conversation with Majidi in approximately January 2016, Shor said: “I am 

overmarked by a bunch of  millions… I am at 3 [dollar spread] on 6 dollar bonds…”   

106. In that same conversation with Majidi, Shor made clear that, while bid-side prices for 

bonds were falling, Premium Point’s valuations of  the same bonds were rising because of  its 

application of  sector spreads to price the bonds.    

107. Ahuja similarly knew that Premium Point’s imputed mid-point pricing practice 

overvalued bonds in the Funds’ portfolios, based on conversations with at least the Trader and a 

former portfolio manager at Premium Point both before and during the Relevant Period.  

108. Furthermore, in approximately November 2015, Shor asked the Brokerage Firm and 

another broker-dealer to re-label the mid-point price marks they had been providing to Premium 

Point on specific bonds as bid-side price marks.  

109. This enabled Premium Point to then impute a mid-point price for these bonds—

rather than having to accept the mid-point prices received from both brokerage firms without 

adding half  of  a bid/ask sector spread—to increase Premium Point’s valuation for a range of  bonds, 

which Shor then did.   

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110. In February 2016, Premium Point’s primary pricing service began providing both 

bid- and mid-level price marks for the first time. 

111. The pricing service’s mid-point price marks were often significantly lower than 

Premium Point’s imputed mid-point price marks.   

112. For example, for the same bond described above in 95 through 102 but for the 

month ending February 29, 2016, the independent pricing service provided Premium Point with a 

mid-point price of  $2.61. Yet Premium Point, using an imputed mid-point price, valued the same 

bond that month at $6.57—over 2.5 times the pricing service’s mid-point price.   

113. At times, Premium Point used bid/ask spreads almost as large as the bid prices 

themselves to calculate imputed mid-point prices that Premium Point then used to value the bonds 

in the Funds’ portfolios. 

114. Also at times, Premium Point’s use of  bid/ask spreads increased the imputed mid-

point prices Premium Point used for valuation even though Premium Point had actually received bid 

prices that had declined from the previous month.   

115. From at least 2012 through March 2016, Premium Point did not disclose to at least 

the vast majority of  the Funds’ investors that it used the imputed mid-point practice described 

above to value securities held by the Funds.   

C. These Schemes Inflated the Funds’ Valuations and Premium Point’s Fees. 

116. Each month during at least the Relevant Period, Premium Point communicated both 

its valuation estimates and final month-end NAVs for each of  the Funds to their respective 

investors. 

117. The schemes described above resulted in Premium Point valuing the Funds’ 

portfolios materially above their fair value under GAAP during at least the Relevant Period, as 

Ahuja, Majidi, and Shor knew or recklessly disregarded.  

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118. Because the schemes described above inflated the Funds’ NAVs, Premium Point 

charged inflated fees to the Funds during at least the Relevant Period.  

D. Premium Point Used Inflated Valuations to Try to Raise Investor Money for a 
New Fund and Stem Redemptions.  

119. In 2015, Ahuja tried to raise money from investors for a second version of  the New 

Issue Fund. 

120. Ahuja wanted to show potential investors that the New Issue Fund had a positive 

performance track record.   

121. During 2015, Ahuja pressured the Trader to inflate the New Issue Fund’s valuations.  

122. Ahuja used the New Issue Fund’s inflated valuations to market the new fund (which 

ultimately failed to materialize) to prospective investors. 

123. In mid- to late 2015, Premium Point needed to raise cash by selling some securities 

in the Mortgage Credit Fund because of  large investor redemptions from the fund.  

124. During that same time, at least partly because Premium Point had overvalued 

securities in the Mortgage Credit Fund, Premium Point sold many securities held by that fund at 

prices significantly below Premium Point’s valuation of  the same securities.   

125. Premium Point ran an internal price variance report showing the Funds’ actual trades 

versus Premium Point’s valuations of  the same securities.  

126. Majidi did not want Shor to sell certain securities because the transactions would 

appear on the price variance report. 

127. Ahuja and Majidi communicated with Shor about the prices at which Premium Point 

was selling securities and the expected losses for future sales when compared to Premium Point’s 

higher valuations for those same securities.  

128. In essence, Ahuja, Majidi, and Shor discussed the extent of  Premium Point’s 

overvaluation of  securities and its impact on Premium Point’s performance.  

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129.  To deter investors from submitting additional redemption requests, Ahuja and 

Majidi set even higher, unrealistic performance targets for the Mortgage Credit Fund and continued 

to pressure the Trader and Shor to inflate valuations.  

130. During at least the Relevant Period, while the Mortgage Credit Fund sustained 

significant redemptions, it continued to receive additional investor funds through subscriptions.   

IV. The Scheme Collapsed, and Premium Point Materially Revised Values Downwards.  
 

131. In approximately April 2016, during its audit of  the Funds’ 2015 year-end financial 

statements, the Funds’ auditor became concerned that Premium Point had significantly overstated 

the Funds’ valuations and began a review.  

132. In April 2016, Premium Point informed the Funds’ investors that it intended to 

restate NAVs for late 2015 and later periods.   

133. Premium Point ultimately revised its valuation figures for the Relevant Period and 

determined that, at least during that period, the Funds had been overvalued. 

134. Based on Premium Point’s revised valuation figures, Premium Point had overvalued 

each of  the Funds monthly by over 14% on average during the Relevant Period. 

135. For example, for the month ending December 31, 2015, Premium Point determined 

that the Mortgage Credit Fund had been overvalued by over $50 million and the New Issue Fund 

had been overvalued by $40 million.   

136. Indeed, for that same month, Premium Point had overvalued the bond described in 

95 through 102 above (among many others) by more than $7 million, both by using a sham, inflated 

bid-side price from the Brokerage Firm and imputing a mid-point price using a bid/ask sector 

spread.   

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137. Ultimately, for fiscal years 2015 and 2016, Premium Point failed to obtain any annual 

audit of  the Funds (much less an annual audit by an independent public accountant registered with 

and subject to regular inspection by the Public Company Accounting Oversight Board (“PCAOB”)).  

138. Nor did Premium Point obtain an annual surprise examination of  the Funds by an 

independent public accountant for fiscal years 2015 or 2016.  

139. Premium Point further failed to distribute audited financial statements to the Funds’ 

investors for fiscal years 2015 and 2016.   

FIRST CLAIM FOR RELIEF 
Violations of  Exchange Act Section 10(b) and Rules 10b-5(a) and (c) Thereunder 

(All Defendants) 
 

140. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein.   

141. Defendants, directly or indirectly, singly or in concert, in connection with the 

purchase or sale of  securities and by use of  the means or instrumentalities of  interstate commerce, 

or of  the mails, or of  the facilities of  a national securities exchange, knowingly or recklessly have: 

(i) employed devices, schemes, or artifices to defraud or (ii) engaged in acts, practices, or courses of  

business which operated or would operate as a fraud or deceit upon other persons. 

142. By reason of  the foregoing, Defendants, directly or indirectly, singly or in concert, 

have each violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. 

§ 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)]. 

SECOND CLAIM FOR RELIEF 
Violations of  Securities Act Section 17(a)(1) and (3) 

(All Defendants) 
 

143. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein.   

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144. Defendants, directly or indirectly, singly or in concert, in the offer or sale of  

securities and by use of  the means or instruments of  transportation or communication in interstate 

commerce or the mails, knowingly or recklessly have: (i) employed devices, schemes or artifices to 

defraud or (ii) engaged in transactions, practices, or courses of  business which operated or would 

operate as a fraud or deceit upon purchasers of  securities.  

145. By reason of  the foregoing, Defendants, directly or indirectly, singly or in concert, 

have violated and, unless enjoined, will again violate Securities Act Sections 17(a)(1) and (3) [15 

U.S.C. §§ 77q(a)(1) and (3)]. 

THIRD CLAIM FOR RELIEF 
Violations of  Advisers Act Sections 206(1) and (2) 

(Premium Point, Ahuja, and Majidi) 
 

146. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein. 

147. At all relevant times, defendants Premium Point, Ahuja, and Majidi were investment 

advisers under Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)]. 

148. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as 

investment advisers, by use of  the mails or the means and instrumentalities of  interstate commerce, 

have: (i) knowingly or recklessly employed devices, schemes, or artifices to defraud clients or 

prospective clients, and/or (ii) knowingly, recklessly, or negligently engaged in transactions, practices, 

and courses of  business which operated or would have operated as a fraud or deceit upon clients or 

prospective clients. 

149. By reason of  the foregoing, Defendants Premium Point, Ahuja, and Majidi, directly 

or indirectly, singly or in concert, have violated and, unless enjoined, will again violate Advisers Act 

Sections 206(1) and (2) [15 U.S.C. §§ 80b-6(1) and 80b-6(2)]. 

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FOURTH CLAIM FOR RELIEF 
Violations of  Advisers Act Section 206(4) and Rule 206(4)-8(a)(2) Thereunder 

(Premium Point, Ahuja, and Majidi) 
 

150. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein. 

151. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as 

investment advisers to a pooled investment vehicle, knowingly, recklessly, or negligently engaged in 

acts, practices, or courses of  business which were fraudulent, deceptive, or manipulative, with 

respect to an investor or prospective investor in the pooled investment vehicle.   

152. By reason of  the foregoing, Defendants Premium Point, Ahuja, and Majidi, directly 

or indirectly, singly or in concert, have violated and, unless enjoined, will again violate Advisers Act 

Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-

8(a)(2)]. 

FIFTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of  Advisers Act Sections 206(1) and (2)  

(Ahuja, Majidi, and Shor) 
 

153. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein. 

154. Defendants Premium Point, Ahuja, and Majidi, directly or indirectly, while acting as 

investment advisers, by use of  the mails or the means and instrumentalities of  interstate commerce, 

have: (i) knowingly or recklessly employed devices, schemes, or artifices to defraud clients or 

prospective clients, and/or (ii) knowingly, recklessly, or negligently engaged in transactions, practices, 

and courses of  business which operated or would have operated as a fraud or deceit upon clients or 

prospective clients. 

155. By reason of  the foregoing, Ahuja and Majidi, directly or indirectly, singly or in 

concert, aided and abetted Premium Point’s violations of  Advisers Act Sections 206(1) and (2) [15 

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U.S.C. §§ 80b- 6(1) and 80b-6(2)] by knowingly or recklessly providing substantial assistance to 

Premium Point’s violations, and Shor, directly or indirectly, singly or in concert, aided and abetted 

Premium Point’s, Ahuja’s, and/or Majidi’s violations of  Advisers Act Sections 206(1) and (2) [15 

U.S.C. §§ 80b- 6(1) and 80b-6(2)] by knowingly or recklessly providing substantial assistance to 

Premium Point’s, Ahuja’s, and/or Majidi’s violations. 

SIXTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of  Advisers Act Section 206(4) and Rule 206(4)-8(a)(2)  

(Ahuja, Majidi, and Shor) 

156. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein 

157. Premium Point, Ahuja, and Majidi, while acting as investment advisers to a pooled 

investment vehicle, knowingly, recklessly or negligently engaged in acts, practices or courses of  

business which are fraudulent, deceptive, or manipulative with respect to an investor or prospective 

investor in the pooled investment vehicle. 

158. By reason of  the foregoing, Ahuja and Majidi, directly or indirectly, singly or in 

concert, aided and abetted Premium Point’s violations of  Advisers Act Section 206(4) [15 U.S.C. 

§ 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. § 275.206(4)-8(a)(2)] by knowingly or 

recklessly providing substantial assistance to Premium Point’s violations, and Shor, directly or 

indirectly, singly or in concert, aided and abetted Premium Point’s, Ahuja’s, and/or Majidi’s violations 

of  Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8(a)(2) thereunder [17 C.F.R. 

§ 275.206(4)-8(a)(2)] by knowingly or recklessly providing substantial assistance to Premium Point’s, 

Ahuja’s, and/or Majidi’s violations.  

  

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SEVENTH CLAIM FOR RELIEF 
Violations of  Advisers Act Section 206(4) and Rule 206(4)-2 thereunder 

(Premium Point) 

159. Paragraphs 1 through 139 are re-alleged and incorporated by reference as if  fully set 

forth herein. 

160. Premium Point, an investment adviser registered with the Commission at all relevant 

times, had custody of  the Funds’ assets under the definition set forth in Rule 206(4)-2(d)(2) [17 

C.F.R. § 275.206(4)-2(d)(2)]. 

161. For fiscal years 2015 and 2016, Premium Point (a) failed to obtain an annual audit of  

the Funds by an independent public accountant registered with and subject to regular inspection by 

the PCAOB, (b) failed to obtain a surprise examination of  the Funds by an independent public 

accountant, and (c) failed to distribute audited financial statements to Fund investors within 120 days 

of  the end of  the Funds’ fiscal years.    

162. By reason of  the foregoing, Premium Point, directly or indirectly, has violated and 

unless enjoined will again violate Advisers Act Section 206(4) [15 U.S.C. § 80b-6(4)] and Rule 206(4)-

2 thereunder [17 C.F.R. § 275.206(4)-2]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests the Court enter a Final Judgment: 

I. 

Permanently enjoining Premium Point and its officers, agents, servants, employees and 

attorneys and all persons in active concert or participation with any of them from violating, directly 

or indirectly, Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 

C.F.R. §§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) 

and (3)]; Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and 

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Rules 206(4)-2 [17 C.F.R. § 275.206(4)-2] and 206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] 

thereunder; 

II. 

Permanently enjoining Ahuja and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R. 

§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)]; 

Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule 

206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder; 

III. 

Permanently enjoining Majidi and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of  them from violating, directly or indirectly, 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R. 

§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)]; 

Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule 

206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder; 

IV. 

Permanently enjoining Shor and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of  them from violating, directly or indirectly, 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]; Rules 10b-5(a) and (c) thereunder [17 C.F.R. 

§§ 240.10b-5(a) and (c)]; Securities Act Sections 17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77q(a)(1) and (3)]; 

Advisers Act Sections 206(1), (2), and (4) [15 U.S.C. §§ 80b-6(1), 80b-6(2) & 80b-6(4)]; and Rule 

206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)] thereunder; 

  

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V. 

Ordering Defendants to disgorge all ill-gotten gains they received directly or indirectly, with 

prejudgment interest thereon, as a result of  the alleged violations; 

VI. 

Ordering Defendants to pay civil money penalties under Securities Act Section 20(d) [15 

U.S.C. § 77t(d)], Exchange Act Section 21(d) [15 U.S.C. § 78u(d)(3)], and Advisers Act Section 209(e) 

[15 U.S.C. § 80b-9(e)];  

  

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