Securities Law Blog

New York-based money manager Guy Albert de Chimay and his firm Chimay Capital Management, Inc. were charged by the Securities and Exchange Commission (SEC) on June 11, 2010 for committing securities fraud and stealing millions of dollars from clients.

According to the SEC complaint, Chimay claimed to be related to the current head of the Chimay royal family of Belgium and used the phony connection to secure investments in an investment vehicle known as the “Bridge Loan Facility” (BLF) since in 2008. The BLF was allegedly advertised as pooling investor funds with millions of dollars of Chimay royal family money to make safe and profitable short-term loans to companies. Chimay purportedly guaranteed fixed annual returns of 12 percent to investors, regardless of the actually performance of the loans.

Investors were told that “Chimay Capital had a long and profitable history as the U.S. investment arm for the Chimay royal family and a privileged circle of family friends, and the BLF investment opportunity was being made available to only a few chosen outsiders”, according to the SEC’s claims.

The SEC alleges that there is no evidence that any bridge loans were actually made. The industry regulator insists that Chimay falsified bank statements to hide the fraud, and siphoned at least $6 million into his personal bank account or spent the money on expenses unrelated to the firm. The reported list of expenses include mortgage payments on his multi-million dollar home in the Hamptons, $500,000 for divorce attorney fees, and massive credit card bills.

The SEC seeks permanent injunctions barring future violations of the charged securities laws, disgorgement of the defendants’ ill-gotten gains plus pre-judgment interest, and financial penalties from the defendants.