The Indiana Secretary of State’s Office has revoked the financial-advising license of a prominent Fishers money manager who is being investigated by the office over financial irregularities involving a hedge fund he operates.
Keenan Hauke’s license revocation late last month follows a Hamilton County judge’s order to temporarily freeze his assets and place a temporary restraining order against him, forbidding Hauke from doing business.
Following an investigation launched in mid-April, the state securities division accused Hauke of violating the Indiana Uniform Securities Act by failing to inform customers that the funds they were investing would be converted to his personal use. No charges have been filed.
Hauke, CEO of Samex Capital Advisors LLC, is barred from doing business at least until a preliminary court hearing on May 10 to determine whether the restraining order should be continued.
State Securities Commissioner Chris Naylor said in his order to revoke Hauke’s license that “a substantial threat of immediate irreparable harm exists, and it is in the public interest” to rescind the license.
At a hearing Friday morning, Hamilton County Superior Court Judge J. Richard Campbell rejected a request from Hauke to unfreeze two of his personal accounts so he can pay his bills. The accounts together contain about $10,000, but have had hundreds of thousands of dollars transferred in and out of them since late 2009.
"It's hard to determine where the money came from," Campbell said in explaining his ruling.
In a Monday court filing, attorneys for Hauke said he and his wife, Sarah, were suffering financial hardship and were concerned about defaulting on their obligations.
“Sarah has had to rely upon various family members in order to pay utility bills and to purchase groceries for the family," the filing said.
The state’s complaint says Hauke intentionally received funds from the bank accounts of Samex Capital Partners that were illegally converted from investors.
Samex Capital Partners, not its financial-advising arm Samex Capital Advisors, operates the hedge fund under investigation.
Hauke also notified the court that he has sold Samex Capital Advisors to Global Investment Solutions LLC in Ontario, Canada.
He maintains in court filings that no money has changed hands as a result of the sale and that the agreement calls for him to receive a percentage of commissions only if a client chooses to move accounts to Global Investment Solutions.
The Secretary of State's Office argued in a recent filing that the sale violated the court’s restraining order and that Hauke should be held in contempt. Judge Campbell denied that request at Friday's hearing.
Attorneys for the Secretary of State's Office now say they aren't necessarily opposed to the sale but want more time to look into it. Campbell gave them until May 10.
Any commissions Hauke would receive from the sale would go into a restitution fund for investors.
Hauke has written a regular investing column for IBJ for nine years. The column was suspended indefinitely in mid-April after the investigation came to light.
The investigation stems from former Samex adviser Scott Noble’s decision to notify the state about irregularities he said he discovered at the firm.
In an interview with IBJ, Noble declined to divulge what the irregularities might include, but said he believed them to be so serious that he resigned from Samex.
Hauke’s lawyer, Larry Mackey of Barnes & Thornburg LLP, said in an e-mail late last month that the complaint was filed by a “former and disgruntled” employee who had previously never raised any concerns with Hauke.