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SEC Charges NY Investment Advisor Thomas Priore and ICP Asset Management

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June 21, 2010

The Securities and Exchange Commission (SEC) announced today that it has charged a New York-based investment adviser Thomas Priore and three of his affiliated firms with fraudulently managing investment products tied to the mortgage markets as they came under pressure in 2007.

The SEC alleges that ICP Asset Management LLC and its owner/president Thomas Priore defrauded four multi-billion-dollar collateralized debt obligations (CDOs), known as the Triaxx CDOs, by engaging in fraudulent practices and misrepresentations that caused the CDOs to lose tens of millions of dollars. In doing so, Priore and his companies made tens of millions of dollars in advisory fees and undisclosed profits at the expense of their clients and investors. ICP’s affiliated broker-dealer ICP Securities LLC and its parent company Institutional Credit Partners LLC are also charged in the SEC’s complaint.

Collateralized debt obligations (CDO’s) are a type of structured asset-backed security (ABS) backed by a pool of bonds, loans or other assets. Triaaxx CDOs’ assets were primarily mortgage-backed securities.

"ICP and Priore repeatedly put themselves ahead of their clients," said Robert Khuzami, Director of the SEC’s Enforcement Division. "Instead of acting as fiduciaries, they took advantage of a distressed market to line their own pockets."

George S. Canellos, Director of the SEC’s New York Regional Office, said, "The CDOs were complex but the lesson is simple: collateral managers bear the same responsibilities to their clients as every other investment adviser. When they violate their clients’ trust, we will hold them accountable."

“We at all times acted in the best interest of our clients and intend to vigorously defend these allegations,” Thomas C. Priore told The New York Times in an email message.