The U.S. Securities and Exchange Commission announced that it has charged former New York-based adviser Derek Taller with engaging in persistent and egregious fraudulent conduct while managing and advising two separate investment vehicles, including Vision BioBanc Holdings LLC, an unregistered fund, and StHealth Capital Investment Corporation, a business development company.
According to the SEC, between March 2018 and January 2024, Taller served as the principal officer and director, as well as the external investment adviser, of the two investment funds.
During 2020, Taller allegedly disseminated offering documents to prospective investors in Vision Holdings that stated that the fund was supervised by an independent board of directors and its financial statements would be audited by an independent auditor. The SEC reported that these representations were false, as Vision Holdings never engaged an independent auditor, and Taller was the only active board member until at least August 2021. In total, the SEC said that Taller misappropriated at least $500,000 between the two companies.
Additionally, in May 2020, Taller allegedly acquired an interest in a third-party startup and, days later, directed StHealth Capital and Vision Holdings to loan the startup a combined $2 million without disclosing his interest in the borrower. The SEC stated that these loans constituted a joint arrangement, as StHealth Capital was a BDC at the time, and therefore the company was required to obtain an SEC order prior to entering into such a transaction. Taller never sought this order, and, for the rest of 2020 and early 2021, Taller allegedly directed Vision Holdings to loan approximately $21.7 million to the startup and its affiliates, without ever disclosing to the fund or its investors that he had separate business dealings with the startup and its affiliates.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Taller with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Section 57(a)(4) of the Investment Company Act of 1940 and Rule 17d-1 thereunder.
The SEC seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, civil penalties, and an officer-and-director bar.
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