China Bank Unit Faces Ponzi Scheme Suit Over $46.5M Loss
Emilie Ruscoe, 16 April 2021
A Canada-based investment firm has sued the Industrial and Commercial Bank of China Financial Services LLC in New York state court, accusing ICBC of looking the other way while an alleged Ponzi schemer used her accounts there to orchestrate a $100 million investment scam.
In its complaint filed Thursday, SureFire Dividend Capture LP sought at least $46.6 million that it, and its predecessors, invested in liquid hedge fund Broad Reach Capital LP, which was run by former broker Brenda Smith. According to SureFire, ICBC, a U.S. subsidiary of the state-owned Industrial and Commercial Bank of China Ltd., was the bank that was designated to serve as Broad Reach’s “clearing broker” for the unique “dividend capture” options trading strategy that Broad Reach used.
SureFire described itself as a special purchase vehicle that was created specifically to hold dividend capture investments. As such, the Canadian company alleged, it was lured into a trap set by Smith, who controlled Broad Reach and used the fund as part of an elaborate ploy to cheat at least 40 would-be investors out of tens of millions of dollars.
In 2019, Smith was hit with both criminal charges and U.S. Securities and Exchange Commission allegations related to the purported scheme.
