The Securities and Exchange Commission has charged a Bahamas-based brokerage firm and its president for facilitating a fraudulent scheme that enabled a hedge fund manager to swindle $45 million from clients.

The Securities and Exchange Commission has charged a Bahamas-based brokerage firm and its president for facilitating a fraudulent scheme that enabled a hedge fund manager to swindle $45 million from clients.

The SEC alleges that Julian Brown and his firm Alliance Investment Management enabled the scheme by providing investors with false assurances about who was holding their money and how much money they had in their accounts.

According to the SEC’s complaint, Brown and AIM purported to be the custodian for assets under the management of hedge fund manager Nikolai Battoo from at least 2009, when their firm did not have custody of most of the assets listed on investor account statements.

The SEC said that Brown and AIM allowed Battoo to create false account statements that vastly overstated the value of investors’ assets by more than $150 million. Brown and AIM then routinely provided the false account statements to auditors and others acting on behalf of Battoo’s investors.

The SEC further alleges that Brown and AIM permitted Battoo to misappropriate at least $45 million of investor funds by transferring money at Battoo’s behest from investor accounts to Battoo’s direct control. Battoo used these funds to pay AIM and Brown more than $5 million in return for their assistance.

The SEC obtained a court-ordered freeze over Battoo’s assets after charging him in 2012 with defrauding investors around the world by hiding major losses while falsely boasting that their investments were performing remarkably during the financial crisis.