Investment advisor of Indian origin pleads guilty to $9 M FB stock fraud

NEW YORK: An investment advisor of Indian origin in the US has pleaded guilty to perpetrating a $9 million investment fraud scheme involving Facebook stock.

The 40-year-old Gignesh Movalia, a registered investment advisor in Florida, pleaded guilty before US Magistrate Judge Anthony Porcelli of the Middle District of Florida to one count of investment advisor fraud, according to a report in Daily Excelsior.

Movalia, Founder and Manager, OM Global Investment Fund, admitted that he began soliciting investments for the fund around 2011 by among other methods, touting access to pre-initial public offering (IPO) shares of Facebook.

By the end of 2012, Movalia raised more than $15 million for the fund, and more than $9 million of the amount raised was for side pocket investments, which were to be used exclusively for purchasing of Facebook shares, he admitted in the court.

Quoting PTI, Daily Excelsior reported that Movalia admitted that contrary to these representations and unknown to side pocket investors, he used funds designated exclusively for the purchase of Facebook shares for other investments, which he concealed from the investors.

Meanwhile, the newspaper reported that Movalia will be sentenced at a later date.