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National Pension Service of Korea Wagers Offices, Hotels Will Recover

The world’s third largest pension fund placed a $1 billion bet on public global real estate with asset manager Russell Investments.
By Sarah Min


The National Pension Service of Korea (NPS) has awarded a $1 billion global real estate mandate to Russell Investments, betting that offices, hotels, and other public properties will swing back after the world recovers from the pandemic. 

The mandate will help the world’s third largest pension fund capitalize on the public real estate markets to complement its private real estate portfolio, as well as improve its risk-adjusted return, and diversify the fund, according to a statement from Scott Kim, head of the real estate investment division at NPS. 

It’s the second such mandate awarded to Russell Investments from the South Korean pension fund, which has $710 billion in assets, the firm said last month. 

The asset manager expects that public real estate is expected to attract more cash flow, thanks to continually frothy markets and low interest rates, particularly as the outlook for the asset class has altered with the COVID-19 vaccine. Demand for public real estate is expected to come back after the distribution of the vaccine this year. 

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“Successful distribution of COVID-19 vaccines should enable demand for public real estate to recover, particularly for the most impacted property sectors, such as retail, office, and lodging,” Bruce Eidelson, director and senior equity portfolio manager at Russell Investments, said in a statement. 

“We expect the ever-broadening intra-sector performance dispersion will create a better active management environment which can produce significant return over the benchmark,” he added.

The overseas mandate also comes as NPS has signaled that it will increase its allocation into global equities up to 50% by 2024, versus 35% in 2019, according to its most recent fiscal report. The pension fund has invested up to $260 billion in global investments, as of October. 

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Home > News > Risk > SEC Charges Las Vegas Business Owner for Alleged Role in Defrauding Elderly Investors
Risk

SEC Charges Las Vegas Business Owner for Alleged Role in Defrauding Elderly Investors

Ponzi scheme allegedly raised more than $170 million from approximately 1,100 investors.
By Michael Katz


The US Securities and Exchange Commission (SEC) has charged a Florida business owner for unlawfully selling securities of real estate firm EquiAlt LLC to retail investors, many of whom were elderly people who invested through their individual retirement accounts (IRAs).  

DeAndre Sears, who resided in Las Vegas, and his company MASears LLC, which does business as Picasso Group, were charged with registration violations. The SEC previously filed an enforcement action against EquiAlt, CEO Brian Davison, and Managing Director Barry Rybicki in connection with the alleged scheme.

According to the SEC’s complaint, between 2014 and 2020, Sears sold at least $25 million of EquiAlt’s securities to more than 145 investors who were mainly unaccredited, unsophisticated, and elderly. During those years, Sears was identified in EquiAlt private placement memoranda as the company’s managing director of investments, president of business development and marketing, or vice president of investor relations. 

The SEC said that through the Picasso Group, Sears received approximately $3.5 million in transaction-based sales commissions from EquiAlt, despite not being registered as a broker/dealer (B/D). The SEC alleges that EquiAlt was operating a Ponzi scheme in which it raised more than $170 million from approximately 1,100 investors in 35 states.

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EquiAlt, through a network of unregistered sale agents, sold investors three- or four-year term debentures. The firm’s executives told investors that their money would be used to purchase real estate in distressed markets in the US and that the investments would generate revenues sufficient to pay interest rates of 8% to 10% per year. However, the EquiAlt Funds “were unprofitable almost from inception,” according to the SEC.

The SEC said the investors were unsophisticated in that they lacked knowledge or expertise in financial or business matters, were not capable of evaluating the merits or risks of the investment, and were not capable of bearing the economic risks of the investment.

“Many of the investors in this Ponzi scheme were attracted to investments in the EquiAlt Funds by representations that the investments were secure, safe, low risk, and conservative,” said the complaint, which added that when EquiAlt’s revenues were not sufficient to pay the money owed to investors, it “soon resorted to fraud, using new investor money to pay the interest promised to existing investors.”

The SEC’s complaint charges Sears and Picasso Group with violating the securities registration provisions of the Securities Act of 1933, and the broker/dealer registration provisions of the Securities Exchange Act of 1934. Without admitting or denying the SEC’s allegations, Sears and Picasso Group have agreed to the entry of a judgment providing injunctive relief with disgorgement and civil penalties to be determined by a court at a later date.  

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