Omar Zaki, 21, is fined $25,000 ‘for running a fake hedge fund that scammed investors out of $1.7m

Omar Zaki, 21, misled investors with prospectuses that contained false information about his trading history, his fund’s growth and management team scamming them out of $1.7 million

A Yale graduate is alleged to have bilked around a dozen investors out of millions of dollars after running a hedge fund scam when he should have been concentrating on his studies.  

Omar Zaki, now 21, pretended to run a hedge fund while he was enrolled at the Ivy League university and managed to convince 11 investors to pool their money with him.

He persuaded them to part with their cash by telling them how his firm relied on an algorithm that had produced incredible returns, sometimes as much as an unbelievable 114 per cent over a period of a decade. 

Even during the best years, the stock market rarely generates returns of more than 10 per cent annually.  

The Securities and Exchange Commission allege that Zaki’s claims were complete lies: that his fund never used such an algorithm, that he misled investors about how much money it managed and then deliberately wrongly reported returns in excess of 80 percent between December 2016 until March 2017.

The 21-year-old Yale graduate duped 11 individuals into investing $1.7 million in an unregistered hedge fund he operated while an undergraduate student. Yale is pictured

Zaki pictured, far left,  gave presentations claiming the fund’s assets totaled between $2 million and $5 million, when assets under management were never greater than $1.3 million

The scheme was uncovered after investors who were considering financing an offshore fund with Zaki, pictured right, asked to verify the fund’s bank and brokerage account balances

Zaki on Monday settled fraud charges with the commission, agreeing to pay a $25,000 civil penalty and to comply with a three-year ban from working as an investment adviser

Zaki is also alleged to have told investors how he managed between $2 and $5 million but had only raised $1.7 million in assets  from 11 individuals between January 2017 and February 2018. 

Zaki, who graduated from Yale last year with a bachelor’s degree in economics and physics, has not admitted nor denied the allegations made by the SEC findings, however he has agreed to pay a $25,000 fine. 

The SEC is even letting him pay in installments of around $2,000 a month over three years because he is a recent college graduate and now finds himself unemployed.  

As part of the SEC settlement, Zaki has also agreed not to work as an investment adviser for at least three years.