Securities Lawyers Blog
The attorneys of Gana Weinstein LLP are investigating a series of actions by the Connecticut Department of Banking (the Commissioner) involving James Neilsen (Neilsen), Neilsen Financial Services (NFS), Ulysses Partners, LLC (Ulysses), and Catherine Sheridan (Sheridan) and allegations that Neilsen sold over $10,000,000 in unregistered securities offerings to customers. The actions are Docket No. CRF-13-8014-S and CRF-15-8175-S. The Commissioner alleged that from approximately November 2005 through approximately December 2010, Neilsen offered and sold approximately $10 million of securities to at least ten Connecticut investors who were mostly his CPA clients. These funds were allegedly used primarily to finance Ulysses’ business expenses.
Neilsen was previously registered as a broker-dealer agent of Tradition Asiel Securities Inc. (Tradition Asiel) from December 17, 2004 to July 2, 2007, and with Sound Securities, LLC (Sound Securities) from August 7, 2008 to December 9, 2009. Neilsen was also registered with the National Futures Association (NFA) as an associated person of Longship Alternative Asset Management (Longship) from April 5, 2010 to December 29, 2010. In addition, Neilsen has been a Certified Public Accountant (CPA) with the Connecticut State Board of Accountancy since October 9, 1986. Neilsen was a founding member, chief financial officer, and treasurer of Ulysses and handled all of Ulysses’ day-to day financial decisions. Ulysses is now a defunct Illinois limited liability company but was a third-party marketer of hedge funds whose main function was to introduce and market hedge funds to financial institutions in exchange for the hedge funds paying Ulysses a fee.
According to the Commissioner Neilsen along with three other parties formed Ulysses as a self-described “third-party marketer” to solicit and refer prospective institutional investors to hedge funds. Two of those parties resigned from Ulysses within several months of Ulysses’ inception and were never actively involved in Ulysses’ activities. The third party, Sheridan was alleged to be a founding member, chief executive officer, and control person of Ulysses until she resigned from Ulysses in 2010. The Commissioner claimed that Sheridan handled all of the marketing and networking functions at Ulysses. The Commissioner found that Sheridan and Neilsen split revenues generated by Ulysses equally. In addition, Sheridan was previously registered as a broker-dealer with Tradition Asiel from August 10, 2004 to July 2, 2007, and with Sound Securities from July 25, 2007, to October 7, 2010. Sheridan is currently registered with FINRA as a general securities representative, general securities principal, options principal and equity trader with the brokerage firm North South Capital, LLC (North South). Sheridan is also currently registered with PE Investments LLC, a commodity pool operator associated with the NFA.
The Commissioner alleged that Neilsen, on behalf of Ulysses, paid Sheridan a monthly draw, in the form of checks signed by Neilsen representing Sheridan’s salary and reimbursement for Sheridan’s travel and business expenses related to her marketing and networking efforts for Ulysses. According to the Commissioner, Sheridan received approximately $2 million in total for both business expenses and personal expenses unrelated to Ulysses.
The Commissioner also alleged that Neilsen raised $10 million through securities sales to at least ten Connecticut investors. The Commissioner found that Neilsen has partially repaid some of the investors but that there is still an outstanding balance owed to investors of approximately $7 million dollars. The Commissioner claimed that Neilsen induced Neilsen’s CPA clients to invest in Ulysses by representing to them that the investment was an excellent one that would generate a high rate of return. Further, the Commissioner alleged that in connection with the offer and sale of the Ulysses Investments, Neilsen did not provide investors with any offering document describing the business of Ulysses or disclosing any risks associated with investing in Ulysses. Instead, investors only received the underlying promissory note or investment agreement.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.