The Securities and Exchange Commission has announced an asset freeze against a Chicago-area money manager and his hedge fund advisory charged with lying to prospective investors in their startup quantitative hedge fund. A federal court has entered a preliminary injunction order in the case, which was unsealed earlier this week.

The SEC alleges that Belal K Faruki of Aurora, Ill, and his advisory firm Neural Markets LLC solicited highly sophisticated individuals to invest in the "Evolution Quantitative 1X Fund," a hedge fund they managed that supposedly used a proprietary algorithm to carry out an arbitrage strategy involving trading in liquid exchange-traded funds (ETFs). Faruki and Neural Markets falsely represented the existence of investor capital and that trading was generating profits when, in fact, losses were being incurred. They defrauded at least one investor out of $1 million before confessing the losses, and were soliciting other wealthy investors before the SEC obtained a court order to halt the scheme.