The Securities and Exchange Commission has declared fraud charges against a Detroit-based investment advisory firm Ambassador Capital Management and portfolio manager Derek Oglesby for deceiving the trustees of a money market fund

The Securities and Exchange Commission has announced fraud
charges against Detroit-based investment advisory firm Ambassador Capital
Management and portfolio manager Derek Oglesby for deceiving the trustees of a
money market fund.

“Money market funds seek to maintain a stable share price by
investing in highly safe securities. Under the federal securities laws, a money
market fund may only invest in securities determined by the fund’s board of
trustees to present minimal credit risk,” the US authority said.

The SEC alleges that the firm and Oglesby “repeatedly” made
false statements to trustees of the Ambassador Money Market Fund about the
credit risk in the securities they purchased for its portfolio. It also said
the trustees were misled about the fund’s exposure to the eurozone credit
crisis of 2011 and the portfolio diversification.

“Compliance with the risk-limiting provisions is critically
important for a money market fund. 
Deviations can have serious consequences for pricing of fund shares and
how the fund markets itself to investors,” said Marshall Sprung, co-chief of
the SEC Enforcement Division’s Asset Management Unit.

The SEC’s order alleges that Ambassador Capital Management
violated the antifraud provisions of the Investment Advisers Act of 1940 while
Oglesby “aided and abetted” the violations. 

The authority's litigation will be led by Jonathan Polish, Robert Moye, and Timothy Leiman.