SEC v. Silver Point Capital, L.P., No. 3:24-cv-02018, District of Connecticut (Dec. 20, 2024) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
___________________________________________
       )
SECURITIES AND EXCHANGE COMMISSION, )
       )
   Plaintiff,   )
       )
 v.      ) Civil Action No.
       )
SILVER POINT CAPITAL, L.P.    )
       )
   Defendant.   )
___________________________________________ )
COMPLAINT

Plaintiff Securities and Exchange Commission (“the Commission”), for its Complaint
against Defendant Silver Point Capital, L.P. (“Silver Point” or “Defendant”), alleges as follows:
SUMMARY
1. Silver Point, as a registered investment adviser, was required by law to establish,
implement, and enforce written policies and procedures reasonably designed, taking into
consideration the nature of its business, to prevent the misuse of material nonpublic information
(“MNPI”).  However, Silver Point’s policies and procedures were not reasonably designed to
address the risks associated with its specific business model.  Further, Silver Point failed to
enforce the policies and procedures it did have as to a Silver Point consultant who had routine
access to MNPI.  These failures allowed for a largely unfettered, unmonitored flow of
information from the consultant to Silver Point’s public trading side.
2. As an investment adviser that manages hedge funds, one of Silver Point’s core
business strategies is investing in bankrupt or distressed entities that were struggling to make
payments on debt they had issued.  To execute this strategy, Silver Point was organized into two

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sides: the “public side” and the “private side.”  The public side actively bought and sold the debt
of the distressed entity.  The private side participated as a creditor/investor in confidential
negotiations over how the distressed entity could repay its debt, often receiving MNPI in those
negotiations.  From 2004 to 2021, and specifically in 2019 and 2020, Silver Point consultant
Chaim Fortgang served as Silver Point’s private side representative in these confidential
negotiations.
3. This public/private business model presented a substantial risk that information
from the confidential negotiations would leak from the private side to the public side and then be
misused in trading decisions.  To prevent leakage of MNPI from its private side to its public side,
Silver Point purported to rely on an information barrier between the two sides.  However, Silver
Point’s written policies and procedures establishing the information barrier were not reasonably
designed in light of its public/private business model and Fortgang’s role at Silver Point.
Further, the information barrier was not implemented as to Fortgang to prevent the misuse of the
MNPI he had from his work for Silver Point.
4. Through this action, the Commission seeks a civil penalty and a permanent
injunction prohibiting the Defendant from further violations of the relevant provisions of the
federal securities laws.
VIOLATIONS
5. By virtue of the foregoing conduct and as alleged further herein, Silver Point has
violated Sections 204A and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) [15
U.S.C §§ 80b-4a; 80b-6] and Rule 206(4)-7 promulgated thereunder [17 CFR § 275.206(4)-7].
6. Unless Silver Point is enjoined, it will engage in the acts, practices, transactions,
and courses of business set forth in this Complaint or in acts, practices, transactions, and courses

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of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
7. The Commission brings this action pursuant to the authority conferred upon it by
Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d), 80b-9(e)].
8. The Commission seeks a final judgment: (a) permanently enjoining Silver Point
from violating the Advisers Act laws and rules pursuant to Advisers Act Section 209(d) [15
U.S.C. § 80b-9(d)]; (b) ordering Silver Point to pay a civil money penalty pursuant to Advisers
Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and (c) ordering any other and further relief the Court
may deem just and proper.
DEFENDANT
9. Silver Point Capital, L.P. is a hedge fund manager based in Greenwich,
Connecticut.  It has been registered with the SEC as an investment adviser since 2012.  In its
Form ADV Part 2A, filed in March 2024, Silver Point reported that it had assets under
management of $28.9 billion.
RELEVANT INDIVIDUAL
10. Chaim Fortgang (“Fortgang”), deceased, was a resident of Brooklyn, New
York.  An ex-big law partner, Fortgang was a well-known bankruptcy attorney during his legal
career.  He worked for Silver Point from at least 2004 to October 2021 pursuant to a series of
consulting agreements.
JURISDICTION AND VENUE
11. This Court has jurisdiction over this action pursuant to Advisers Act Sections
209(d), 209(e), and 214(a) [15 U.S.C. §§ 80b-9(d), 80b-9(e), and 80b-14(a)].
12. Defendant, directly and indirectly, has made use of the means or instrumentalities

4

of interstate commerce or of the mails in connection with the transactions, acts, practices, and
courses of business alleged herein.
13. Venue lies in this District under Advisers Act Section 214(a) [15 U.S.C § 80b-
14(a)].  Defendant may be found in, is an inhabitant of, or transacts business in the District of
Connecticut, and certain of the acts, practices, transactions, and courses of business alleged in
this Complaint occurred within this District.
BACKGROUND
A. Silver Point’s Business Model Posed a High Risk of Misuse of MNPI and Its
Procedures Did Not Address that Risk

14. All investment advisers, like Silver Point, are required by law to establish,
implement, and enforce written policies and procedures that are reasonably designed to prevent
the misuse of MNPI.  These policies and procedures must take into consideration the nature of
the adviser’s business, including the circumstances under which the adviser receives MNPI.
15. Silver Point’s business model is heavily focused on investing in distressed debt.
16. Since at least 2004, Silver Point divided its business between a “public side” and
a “private side.”
17. As relevant here, the public side invested in the debt markets for the funds that
Silver Point managed.  It consisted of analysts that researched distressed entities and made
recommendations to buy and sell securities issued by those same entities, a group that considered
and approved the trading recommendations, and traders that executed the trades.
18. Once Silver Point was an investor or holder of debt in a distressed entity, it often
joined the confidential negotiations aimed at crafting a repayment plan or restructuring by the
distressed entity.  Creditors with similar holdings or interests frequently teamed up to form
creditors’ committees for purposes of the negotiations.

5

19. Silver Point typically sent representatives from its private side to sit on creditors’
committees.  The role of the private side representatives was to advocate for advantageous
recoveries for the distressed debt Silver Point was holding and/or concurrently trading.
20. Members of these creditors’ committees routinely exchanged MNPI with the
debtor and/or become aware of MNPI during these confidential negotiations, upon which it
would be illegal to trade.  In the context of restructuring proceedings, MNPI concerning the
parties’ negotiating positions, proposed settlement terms, or the debtor’s financial condition and
ability to pay was highly valuable information for investors looking to trade in securities of the
distressed entities.
B. Silver Point Routinely Used Fortgang to Receive MNPI on its Behalf
21. In 2004, Fortgang began working for Silver Point pursuant to a written agreement
that identified him as a consultant.  Prior to joining Silver Point, Fortgang practiced bankruptcy
law for decades and was widely known in the bankruptcy bar.  He had a reputation for being
aggressive and uncompromising while advocating on behalf of his clients.
22. Fortgang worked almost exclusively for Silver Point as a consultant from 2004
until his death in 2021.  Although his consulting agreement with Silver Point permitted him to
work as a consultant to other entities, he rarely did so.  In those rare instances, Fortgang was
required to notify Silver Point before doing so—giving Silver Point the right to decide whether
such outside work would present a conflict or interfere with Fortgang’s work for Silver Point.
23. Silver Point paid Fortgang a flat, monthly consulting fee of $183,333—
irrespective of hours worked or work product.  Fortgang also was eligible for a discretionary,
year-end bonus.  Although Silver Point solicited feedback on his performance from various
public and private side employees who worked with Fortgang, his bonus was determined by the

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executive who approved trading recommendations for Silver Point, with no objective rating
criteria.
24. Silver Point employed Fortgang to advise both its public and private sides on
issues that arose in connection with Silver Point’s investments and related restructurings.  At
times, he was copied on trading recommendations made by Silver Point’s public side analysts.
25. His work on behalf of Silver Point also included sitting on creditors’ committees,
where he routinely received MNPI and engaged in negotiations on the terms of various
bankruptcy restructurings.  Often, Fortgang was Silver Point’s sole representative on these
creditors’ committees.
C. Silver Point Relied on Its Information Barrier to Satisfy Its Obligations as an
Investment Adviser and Still Trade While in Possession of MNPI

26. To enable Silver Point’s public side to actively trade the debt of a distressed entity
while the private side simultaneously participated in confidential negotiations (and received
MNPI) about the same entity, Silver Point purported to adhere to an information barrier between
the two sides.
27. The information barrier’s design and implementation were critical to satisfying
Silver Point’s legal obligations to establish, implement, and enforce written policies and
procedures reasonably designed to prevent the misuse of MNPI.
28. Silver Point’s Compliance Manual contained the Information Barrier Policies and
Procedures (the “barrier policy”) that dictated how the barrier should function.
29. The barrier policy, which remains in effect, applied to all “Silver Point directors,
officers, partners, employees, temporary employees and any other affiliated persons designated
by [the Compliance department] (which may include consultants, independent contractors and
certain other persons)” [emphasis added].  It required that Silver Point’s Legal and Compliance

7

Department (“Compliance”) designate each of these covered individuals as either public, private,
or administrative, which then determined the level of surveillance and other oversight warranted
by Compliance to prevent the leakage of MNPI.
30. For example, certain communications between public and private employees were
subject to enhanced monitoring, surveillance, and logging requirements by Compliance.  The
central requirement of the barrier policy was that any private side employee who wanted to
communicate with a public side employee (or vice versa) about any investment-related matter
(i.e., not strictly personal or administrative) must first inform Compliance.  Such preapproval
was required regardless of whether the private side possessed “Confidential Information,” which
included, but was not limited to, MNPI.  Such a communication between the public and private
sides was referred to as a “wall crossing.”
31. Per the barrier policy, the employee seeking preapproval of the proposed wall
crossing was required to provide Compliance with certain information, including the
participants, the name of the issuer to be discussed, the discussion topics, whether there was an
information disparity between the public and private sides, and whether the private side had, and
intended to share, Confidential Information.
32. When the private side had Confidential Information about an issuer but did not
plan to disclose such information to the public side during a discussion about that same issuer,
the barrier policy required Compliance to preapprove the communication, as described above,
and also to monitor and log the communication.  Relatedly, Compliance was required by the
barrier policy to maintain a log of all wall crossings between the public and private sides to
ensure daily monitoring of trading in issuers about which the private side had Confidential
Information.

8

33. When the private side had Confidential Information about one entity but planned
to discuss a different entity with the public side about which it did not have Confidential
Information, the barrier policy still required the employee seeking the wall crossing to inform
Compliance ahead of time (with limited exception related to time-sensitivity).  The barrier
policy, as written, left it to Compliance’s discretion whether to also monitor the communication,
but it was Silver Point’s professed practice to monitor and log all such communications between
its public and private sides.
34. Silver Point’s barrier policy also required Compliance to maintain a “watch list”
and a “restricted list” to track the firm’s investments and levels of knowledge.  Compliance
placed an issuer on the restricted list when the public side learned MNPI about that issuer.  Silver
Point was prohibited from trading in securities of issuers on the restricted list.
35. The watch list, on the other hand, included issuers about which only the private
side had Confidential Information.  This list was only accessible to Compliance because, as is
explained in the barrier policy, “the very fact that Private Employees are working on a particular
financing or other transaction may constitute [MNPI].”  As such, Compliance’s involvement in
preapproving and monitoring discussions between public and private sides was critical.
36. Reflecting the substantial risk in Silver Point’s business model that the private
side may pass MNPI to the public side, the barrier policy also dictated physical separation
between the public and private sides within Silver Point’s office space, with key card access
required for the private side space.  Private side employees were prohibited from having any
investment-related conversations or meetings with, or in the physical presence of, public side
employees while in the office.

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37. Consistent with Fortgang’s function at Silver Point and the heightened risk
attendant to his role, he agreed to be bound by the barrier policy.  Specifically, his consulting
agreement mandated that he “comply with all of [Silver Point’s] compliance policies and
procedures, including, without limitation, the [barrier policy]....”
38. Indeed, in at least two instances, Compliance did monitor and log Fortgang’s
communications with public side employees, as required by the barrier policy, categorizing him
as a “Private Employee” in the log.  Silver Point also, at times, placed or kept an entity on its
watch list (thus triggering additional monitoring) when only Fortgang had MNPI about the
entity.  But these few instances were the exception to the rule.
D. Silver Point’s Policies and Procedures Were Deficient

39. Silver Point failed to establish and adopt written policies and procedures
reasonably designed to prevent the misuse of MNPI in light of its public/private business model
and Fortgang’s unique and critical role within the firm.
40. Specifically, Silver Point’s barrier policy did not clearly require that consultants
like Fortgang, who regularly sat on creditors’ committees and received MNPI, be subject to the
same oversight and controls as private side employees who also sat on creditors’ committees and
received MNPI.  Instead, Silver Point’s barrier policy was, at best, ambiguous—stating only that
consultants like Fortgang may be designated as private employees, without providing any criteria
for Compliance to use to determine when to do so.
41. Silver Point’s deficient policies and procedures meant Fortgang’s interactions
with the public side went largely unpoliced by Compliance, notwithstanding Fortgang’s routine
exposure to MNPI as Silver Point’s creditors’ committee representative, his near-constant

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contact with members of the public side, and the incentives created by his performance-based
compensation.
E. Silver Point Failed to Enforce the Barrier Policy as to Fortgang and His Activities

42. Silver Point’s enforcement of the barrier policy as to Fortgang was also deficient.
43. Based on Fortgang’s role and his routine access to MNPI on Silver Point’s behalf,
he functioned as, and should have been designated by Compliance as, a private employee for
purposes of applying the barrier policy to him.  However, Silver Point failed to treat or designate
him as such, notwithstanding his express agreement to be bound by the barrier policy.  By not
designating Fortgang as a public or private employee, Silver Point allowed Fortgang to operate
in a loophole, effectively exempting him from the public/private divide that was crucial to
ensuring that Silver Point did not misuse of MNPI.
44. Silver Point also did not consistently preapprove and, where appropriate, monitor
and log Fortgang’s calls and in-person communications with the public side.
45. Nor did Silver Point conduct email surveillance, periodic email check-ins, or
trainings for Fortgang as it did for private side employees.
46. Silver Point’s failure to enforce its barrier policy created a substantial risk of
MNPI leakage from Fortgang to the public side, and therefore a risk of illegal insider trading by
Silver Point.
47. Silver Point’s trading in defaulted bonds issued by the Commonwealth of Puerto
Rico (“Puerto Rico bonds”) underscores the risk created by Silver Point’s failure to establish,
implement, and enforce policies and procedures reasonably designed to prevent the misuse of
MNPI.

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48. As described in more detail below, between September 17, 2019 and February 7,
2020, Silver Point purchased over $260 million of Puerto Rico bonds.  Over the same period,
while Fortgang was in possession of MNPI about the same Puerto Rico bonds, he had more than
500 calls with public side employees without the involvement of Compliance.  At the very least,
these calls should have been preapproved by Compliance pursuant to the barrier policy, so that
Compliance could carry out its obligation to determine whether to approve, monitor and/or log
the calls.
49. When Silver Point sold the Puerto Rico bonds it amassed during that period, it
generated profits of over $29 million.
50. Silver Point’s deficient establishment and enforcement of its barrier policy as to
Fortgang meant he had hundreds of opportunities to improperly share MNPI with the public side,
presenting a substantial risk that Silver Point generated such profits by trading on the basis of
MNPI.
Holes in Silver Point’s Barrier:  The Puerto Rico Bankruptcy Example
51. In 2015, the Commonwealth of Puerto Rico (“Puerto Rico”) experienced a
financial collapse that resulted in it defaulting on a substantial part of its outstanding debt.  In
June 2017, a federal bankruptcy court appointed a panel of federal judges to conduct a mediation
between Puerto Rico and its creditors to reach an economic resolution on recoveries for creditor
bondholders.  The court order appointing the mediators specified that the participants and the
mediators would be bound by confidentiality.

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52. From at least September 17, 2019 through February 9, 2020 (the “relevant
period”), Silver Point participated in the confidential mediation as a member of an “ad hoc”
creditors’ committee comprised of Puerto Rico bondholders.
1

53. During that same period, Silver Point was a signatory to a mediation agreement
that obligated it to keep confidential “all Proposals, views, conduct, and statements made,
whether oral or written, and any information, or graphic or physical evidence offered in the
course of the mediation (or in advance of the mediation if so designated).”  The agreement
warned that “there are applicable securities laws or regulations that may, depending on the
circumstances, prohibit the purchase and sale of securities by persons who possess MNPI.”
54. Fortgang was Silver Point’s sole representative in the confidential mediation for
most of the relevant period.  On Silver Point’s behalf, he attended mediation sessions and
participated in calls with other creditors, the mediator, and representatives of Puerto Rico,
offering Silver Point’s perspective on the economic terms of any deal and serving as its primary
negotiator.  He also received settlement proposals circulated amongst the parties and nonpublic
information about Puerto Rico’s financial position—much of which constituted MNPI and was
marked as such.
55. Silver Point assigned Fortgang to this role (rather than a public side analyst well-
versed in Puerto Rico bonds), so that its public side could rely on the information barrier to
continue to trade Puerto Rico bonds while the mediation was ongoing (and while Silver Point
had MNPI about Puerto Rico bonds).

1
 Ad hoc creditors’ committees (in contrast to official creditors’ committees that are established pursuant to the
Bankruptcy Code) are self-formed groups of creditors that coordinate amongst themselves and with the debtor on
the implementation of a restructuring.  Ad hoc committees, like official committees, seek to influence the outcome
of a bankruptcy case in favor of similarly situated creditors.

13

56. Silver Point’s use of an information barrier and continued trading in Puerto Rico
bonds while it was in possession of MNPI about Puerto Rico bonds (through Fortgang) was
unique amongst the many other hedge fund participants to the mediation.  Other hedge funds
involved in the mediation flatly prohibited their employees from trading in Puerto Rico bonds
when they had MNPI from the mediation.
57. Unbeknownst to the other participants in the mediation, the barrier policy that
Silver Point was relying on to trade was not enforced as to Fortgang, even though he was Silver
Point’s representative and had received MNPI from the mediation.
58. For example, on September 17, 2019, Fortgang, alone, attended the first Puerto
Rico mediation session on behalf of Silver Point and received MNPI about the risks associated
with Puerto Rico’s fiscal plan.  Following the session, Compliance correctly added Puerto Rico
to Silver Point’s watch list based on Fortgang’s receipt of MNPI.
59. During that confidential mediation session, Fortgang had a seven-minute call with
a member of Silver Point’s public side.  Silver Point’s barrier policy required that Compliance be
alerted to the call.  It was not.  Because the call was not preapproved, Compliance was unable to
determine whether it needed to be monitored and entered on the wall crossing log to ensure daily
monitoring of trading in Puerto Rico bonds thereafter.
60. Later that same day, the relevant members of Silver Point’s public side approved
a trading recommendation to purchase approximately $14.5 million Puerto Rico bonds.
61. Further, on September 19, 2019, Fortgang was present in Silver Point’s
Greenwich, Connecticut office.  Silver Point’s barrier policy required actual physical separation
between the public and private sides in the office.  Despite this, Fortgang was permitted to move
unimpeded throughout the office, specifically including spaces where public side employees

14

worked—even sit next to the traders while they placed trades—without any oversight by
Compliance, in contravention of the barrier policy.
62. Then, on September 20, 2019, Compliance improperly removed Puerto Rico
bonds from the watch list, despite Fortgang still possessing MNPI from his attendance at the
September 17, 2019 mediation session.  As a result, subsequent trading in Puerto Rico bonds was
not subject to the enhanced daily surveillance required by the barrier policy until it was added
back to the watch list on October 25, 2019.  In fact, Silver Point made 11 purchases of Puerto
Rico bonds on four different days, in amounts totaling over $46 million, during that 5 ½ week
period.
63. Fortgang continued to possess MNPI until at least October 17, 2019, when that
information was released to the public (and thus no longer constituted MNPI).  Despite this,
between September 17 and October 17, Fortgang had at least 123 calls with 11 different
members of Silver Point’s public side, including four calls with the primary analyst who covered
Puerto Rico and recommended trades in Puerto Rico bonds and 15 calls with the executive who
approved those trading recommendations.  The barrier policy required that Compliance be
alerted to these calls ahead of time and, depending on the nature of the calls, also log and
monitor the calls, yet none of these things happened.
64. Between October 25, 2019 and February 9, 2020, Fortgang received additional
MNPI in connection with the confidential mediation, including settlement offers exchanged by
the parties on October 25, October 30, November 5, November 7, November 8, December 16,
and December 30.  Fortgang also attended in-person mediation sessions on November 5, 2019
and December 16, 2019 at which MNPI was exchanged.

15

65. During this same period, Fortgang had at least 394 calls with 17 different
members of Silver Point’s public side, including 36 calls with the primary analyst who
recommended trades in Puerto Rico bonds and 22 calls with the executive who approved Puerto
Rico bonds trading recommendations.
66. For instance, on November 5, 2019, while Fortgang was physically present in a
mediation session and had just received MNPI in the form of a settlement offer by Puerto Rico,
Fortgang called the primary analyst who covered Puerto Rico.  The two spoke for two minutes.
The analyst, in requesting the call, knew Fortgang was attending the mediation session and that
MNPI would have been exchanged at the start of the mediation session, yet neither he nor
Fortgang alerted Compliance, in contravention of the barrier policy.
67. Indeed, the barrier policy required Compliance to preapprove all 394 calls
between Fortgang and the public side and, potentially, monitor and log them as well.  However,
none of the calls were preapproved, much less monitored or logged by Compliance.  As a result,
the nature and substance of the calls is unknown.
68.  In addition, on December 3, 2019, while Fortgang was still in possession of
MNPI learned during the October and November 2019 negotiations, he twice called the same
analyst who covered Puerto Rico bonds.  Later that afternoon, the analyst sent a draft trading
recommendation to his supervisor.  The next day, Fortgang again called the analyst and the two
spoke for four minutes.  Under the barrier policy, Compliance should have been alerted to each
of these calls in advance, but it was not.
69. A few hours later, the analyst circulated a final trading recommendation to
purchase additional Puerto Rico bonds.  The recommendation was approved the same day, and,

16

between December 4 and December 12, Silver Point bought more than $54 million Puerto Rico
bonds.
70. On December 12, 2019, Fortgang was again in Silver Point’s office.  While
Fortgang was present in the office, but not subject to the public/private physical separation
required by the barrier policy, the public side analyst responsible for covering Puerto Rico bonds
circulated a “TIME SENSITIVE” trading recommendation to purchase additional Puerto Rico
bonds.  The recommendation was approved the following day, and Silver Point then bought a
total of over $18 million of Puerto Rico bonds.
71. As exemplified above, Silver Point’s barrier policy, which merely provided
generally that consultants such as Fortgang “may” be subject to it, failed to address an obvious
risk inherent in its business model—Fortgang’s possession of MNPI from participating on
creditors’ committees on behalf of Silver Point for more than 17 years and his untrammeled
access to the public side with no oversight, or even notice to the Compliance staff responsible for
oversight.
72. Silver Point neither established nor enforced the barrier policy as to Fortgang.  As
a result, there was a substantial risk that Fortgang would, advertently or inadvertently, pass
MNPI about an entity to the public side of Silver Point, thus influencing its trading decisions.
Whether Fortgang in fact ever passed MNPI to the public side is impossible to know, precisely
because of Silver Point’s failures.
73. Silver Point executed a statute of limitations tolling agreement with the
Commission on July 29, 2024, tolling the statute of limitations period for 90 days.

17

FIRST CLAIM FOR RELIEF
Violation of Section 204A of the Advisers Act

74. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 73.
75. At all times relevant to the Complaint, Defendant, while acting as an investment
adviser, failed to establish, implement, and enforce written policies and procedures reasonably
designed, taking into consideration the nature of its business, to prevent the misuse in violation
of the Advisers Act  [15 U.S.C. § 80b-1 et seq.], or the Securities Exchange Act of 1934  [15
U.S.C. § 78a et seq.], or the rules or regulations thereunder, of material nonpublic information by
such investment adviser or any person associated with such investment adviser.
76. By reason of the foregoing, Defendant violated Section 204A of the Advisers Act
[15 U.S.C. § 80b-4a].
SECOND CLAIM FOR RELIEF
Violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 Promulgated Thereunder
77. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 73.
78. At all times relevant to the Complaint, Defendant, in violation of Section 206(4)
of the Advisers Act and Rule 206(4)-7 thereunder, while acting as a registered investment
adviser that provided advice to clients, failed to adopt and implement written policies and
procedures reasonably designed to prevent violations of the Advisers Act and the rules
thereunder.
79. By reason of the foregoing, Defendant violated Section 206(4) of the Advisers
Act [15 U.S.C. § 80b-6] and Rule 206(4)-7 thereunder [17 CFR § 275.206(4)-7].

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PRAYER FOR RELIEF
 WHEREFORE, the Commission requests that the Court enter a Final Judgment:
I.
Permanently enjoining, pursuant to Advisers Act Section 209(d) [15 U.S.C. § 80b-9(d)],
Defendant and its agents, servants, employees and attorneys and all persons in active concert or
participation with any of them from violating, directly or indirectly, Advisers Act Sections 204A
and 206(4) [15 U.S.C. §§ 80b-4a, 80b-6], and Rule 206(4)-7 [17 CFR § 275.206(4)-7]
thereunder;
II.
Ordering Defendant to pay civil monetary penalties under Advisers Act Section 209(e)
[15 U.S.C. § 80b-9(e)]; and
III.
Granting any other and further relief this Court may deem just and proper.

19

JURY DEMAND
 The Commission hereby demands a trial by jury on all claims so triable.

Dated: December 20, 2024   Respectfully submitted,
/s
Susan R. Cooke (D.C. Bar No. 978173)
Michael C. Moran (CT phv08741, Mass. Bar No.
666885)
SECURITIES AND EXCHANGE
COMMISSION
Boston Regional Office
33 Arch Street
Boston, MA  02110
[email protected]
[email protected]
Cooke phone: (617) 573-4538
Moran phone: (617) 573-8931
Facsimile: (617) 573-4590

Counsel for Plaintiff Securities and Exchange
Commission

UNITED STATES DISTRICT COURT 

DISTRICT OF CONNECTICUT 

___________________________________________  

       ) 

SECURITIES AND EXCHANGE COMMISSION, ) 

       ) 

   Plaintiff,   ) 

       ) 

 v.      ) Civil Action No.  

       ) 

SILVER POINT CAPITAL, L.P.    ) 

       ) 

   Defendant.   ) 

___________________________________________ ) 

COMPLAINT 

 

Plaintiff Securities and Exchange Commission (“the Commission”), for its Complaint 

against Defendant Silver Point Capital, L.P. (“Silver Point” or “Defendant”), alleges as follows: 

SUMMARY 

1. Silver Point, as a registered investment adviser, was required by law to establish, 

implement, and enforce written policies and procedures reasonably designed, taking into 

consideration the nature of its business, to prevent the misuse of material nonpublic information 

(“MNPI”).  However, Silver Point’s policies and procedures were not reasonably designed to 

address the risks associated with its specific business model.  Further, Silver Point failed to 

enforce the policies and procedures it did have as to a Silver Point consultant who had routine 

access to MNPI.  These failures allowed for a largely unfettered, unmonitored flow of 

information from the consultant to Silver Point’s public trading side.   

2. As an investment adviser that manages hedge funds, one of Silver Point’s core 

business strategies is investing in bankrupt or distressed entities that were struggling to make 

payments on debt they had issued.  To execute this strategy, Silver Point was organized into two 

Case 3:24-cv-02018     Document 1     Filed 12/20/24     Page 1 of 19



2 

 

sides: the “public side” and the “private side.”  The public side actively bought and sold the debt 

of the distressed entity.  The private side participated as a creditor/investor in confidential 

negotiations over how the distressed entity could repay its debt, often receiving MNPI in those 

negotiations.  From 2004 to 2021, and specifically in 2019 and 2020, Silver Point consultant 

Chaim Fortgang served as Silver Point’s private side representative in these confidential 

negotiations.   

3. This public/private business model presented a substantial risk that information 

from the confidential negotiations would leak from the private side to the public side and then be 

misused in trading decisions.  To prevent leakage of MNPI from its private side to its public side, 

Silver Point purported to rely on an information barrier between the two sides.  However, Silver 

Point’s written policies and procedures establishing the information barrier were not reasonably 

designed in light of its public/private business model and Fortgang’s role at Silver Point.  

Further, the information barrier was not implemented as to Fortgang to prevent the misuse of the 

MNPI he had from his work for Silver Point.   

4. Through this action, the Commission seeks a civil penalty and a permanent 

injunction prohibiting the Defendant from further violations of the relevant provisions of the 

federal securities laws.   

VIOLATIONS 

5. By virtue of the foregoing conduct and as alleged further herein, Silver Point has 

violated Sections 204A and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 

U.S.C §§ 80b-4a; 80b-6] and Rule 206(4)-7 promulgated thereunder [17 CFR § 275.206(4)-7].   

6. Unless Silver Point is enjoined, it will engage in the acts, practices, transactions, 

and courses of business set forth in this Complaint or in acts, practices, transactions, and courses 

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of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

7. The Commission brings this action pursuant to the authority conferred upon it by 

Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d), 80b-9(e)].   

8. The Commission seeks a final judgment: (a) permanently enjoining Silver Point 

from violating the Advisers Act laws and rules pursuant to Advisers Act Section 209(d) [15 

U.S.C. § 80b-9(d)]; (b) ordering Silver Point to pay a civil money penalty pursuant to Advisers 

Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and (c) ordering any other and further relief the Court 

may deem just and proper.  

DEFENDANT 

9. Silver Point Capital, L.P. is a hedge fund manager based in Greenwich, 

Connecticut.  It has been registered with the SEC as an investment adviser since 2012.  In its 

Form ADV Part 2A, filed in March 2024, Silver Point reported that it had assets under 

management of $28.9 billion.   

RELEVANT INDIVIDUAL  

10. Chaim Fortgang (“Fortgang”), deceased, was a resident of Brooklyn, New 

York.  An ex-big law partner, Fortgang was a well-known bankruptcy attorney during his legal 

career.  He worked for Silver Point from at least 2004 to October 2021 pursuant to a series of 

consulting agreements.   

JURISDICTION AND VENUE 

11. This Court has jurisdiction over this action pursuant to Advisers Act Sections 

209(d), 209(e), and 214(a) [15 U.S.C. §§ 80b-9(d), 80b-9(e), and 80b-14(a)]. 

12. Defendant, directly and indirectly, has made use of the means or instrumentalities 

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of interstate commerce or of the mails in connection with the transactions, acts, practices, and 

courses of business alleged herein. 

13. Venue lies in this District under Advisers Act Section 214(a) [15 U.S.C § 80b-

14(a)].  Defendant may be found in, is an inhabitant of, or transacts business in the District of 

Connecticut, and certain of the acts, practices, transactions, and courses of business alleged in 

this Complaint occurred within this District. 

BACKGROUND 

A. Silver Point’s Business Model Posed a High Risk of Misuse of MNPI and Its 

Procedures Did Not Address that Risk  

 

14. All investment advisers, like Silver Point, are required by law to establish, 

implement, and enforce written policies and procedures that are reasonably designed to prevent 

the misuse of MNPI.  These policies and procedures must take into consideration the nature of 

the adviser’s business, including the circumstances under which the adviser receives MNPI.     

15. Silver Point’s business model is heavily focused on investing in distressed debt.  

16. Since at least 2004, Silver Point divided its business between a “public side” and 

a “private side.”   

17. As relevant here, the public side invested in the debt markets for the funds that 

Silver Point managed.  It consisted of analysts that researched distressed entities and made 

recommendations to buy and sell securities issued by those same entities, a group that considered 

and approved the trading recommendations, and traders that executed the trades.  

18. Once Silver Point was an investor or holder of debt in a distressed entity, it often 

joined the confidential negotiations aimed at crafting a repayment plan or restructuring by the 

distressed entity.  Creditors with similar holdings or interests frequently teamed up to form 

creditors’ committees for purposes of the negotiations.   

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19. Silver Point typically sent representatives from its private side to sit on creditors’ 

committees.  The role of the private side representatives was to advocate for advantageous 

recoveries for the distressed debt Silver Point was holding and/or concurrently trading.  

20. Members of these creditors’ committees routinely exchanged MNPI with the 

debtor and/or become aware of MNPI during these confidential negotiations, upon which it 

would be illegal to trade.  In the context of restructuring proceedings, MNPI concerning the 

parties’ negotiating positions, proposed settlement terms, or the debtor’s financial condition and 

ability to pay was highly valuable information for investors looking to trade in securities of the 

distressed entities.  

B. Silver Point Routinely Used Fortgang to Receive MNPI on its Behalf  

21. In 2004, Fortgang began working for Silver Point pursuant to a written agreement 

that identified him as a consultant.  Prior to joining Silver Point, Fortgang practiced bankruptcy 

law for decades and was widely known in the bankruptcy bar.  He had a reputation for being 

aggressive and uncompromising while advocating on behalf of his clients.    

22. Fortgang worked almost exclusively for Silver Point as a consultant from 2004 

until his death in 2021.  Although his consulting agreement with Silver Point permitted him to 

work as a consultant to other entities, he rarely did so.  In those rare instances, Fortgang was 

required to notify Silver Point before doing so—giving Silver Point the right to decide whether 

such outside work would present a conflict or interfere with Fortgang’s work for Silver Point. 

23. Silver Point paid Fortgang a flat, monthly consulting fee of $183,333— 

irrespective of hours worked or work product.  Fortgang also was eligible for a discretionary, 

year-end bonus.  Although Silver Point solicited feedback on his performance from various 

public and private side employees who worked with Fortgang, his bonus was determined by the 

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executive who approved trading recommendations for Silver Point, with no objective rating 

criteria.   

24. Silver Point employed Fortgang to advise both its public and private sides on 

issues that arose in connection with Silver Point’s investments and related restructurings.  At 

times, he was copied on trading recommendations made by Silver Point’s public side analysts. 

25. His work on behalf of Silver Point also included sitting on creditors’ committees, 

where he routinely received MNPI and engaged in negotiations on the terms of various 

bankruptcy restructurings.  Often, Fortgang was Silver Point’s sole representative on these 

creditors’ committees. 

C. Silver Point Relied on Its Information Barrier to Satisfy Its Obligations as an 

Investment Adviser and Still Trade While in Possession of MNPI 

 

26. To enable Silver Point’s public side to actively trade the debt of a distressed entity 

while the private side simultaneously participated in confidential negotiations (and received 

MNPI) about the same entity, Silver Point purported to adhere to an information barrier between 

the two sides.   

27. The information barrier’s design and implementation were critical to satisfying 

Silver Point’s legal obligations to establish, implement, and enforce written policies and 

procedures reasonably designed to prevent the misuse of MNPI. 

28. Silver Point’s Compliance Manual contained the Information Barrier Policies and 

Procedures (the “barrier policy”) that dictated how the barrier should function.   

29. The barrier policy, which remains in effect, applied to all “Silver Point directors, 

officers, partners, employees, temporary employees and any other affiliated persons designated 

by [the Compliance department] (which may include consultants, independent contractors and 

certain other persons)” [emphasis added].  It required that Silver Point’s Legal and Compliance 

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Department (“Compliance”) designate each of these covered individuals as either public, private, 

or administrative, which then determined the level of surveillance and other oversight warranted 

by Compliance to prevent the leakage of MNPI.  

30. For example, certain communications between public and private employees were 

subject to enhanced monitoring, surveillance, and logging requirements by Compliance.  The 

central requirement of the barrier policy was that any private side employee who wanted to 

communicate with a public side employee (or vice versa) about any investment-related matter 

(i.e., not strictly personal or administrative) must first inform Compliance.  Such preapproval 

was required regardless of whether the private side possessed “Confidential Information,” which 

included, but was not limited to, MNPI.  Such a communication between the public and private 

sides was referred to as a “wall crossing.”   

31. Per the barrier policy, the employee seeking preapproval of the proposed wall 

crossing was required to provide Compliance with certain information, including the 

participants, the name of the issuer to be discussed, the discussion topics, whether there was an 

information disparity between the public and private sides, and whether the private side had, and 

intended to share, Confidential Information.  

32. When the private side had Confidential Information about an issuer but did not 

plan to disclose such information to the public side during a discussion about that same issuer, 

the barrier policy required Compliance to preapprove the communication, as described above, 

and also to monitor and log the communication.  Relatedly, Compliance was required by the 

barrier policy to maintain a log of all wall crossings between the public and private sides to 

ensure daily monitoring of trading in issuers about which the private side had Confidential 

Information. 

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33. When the private side had Confidential Information about one entity but planned 

to discuss a different entity with the public side about which it did not have Confidential 

Information, the barrier policy still required the employee seeking the wall crossing to inform 

Compliance ahead of time (with limited exception related to time-sensitivity).  The barrier 

policy, as written, left it to Compliance’s discretion whether to also monitor the communication, 

but it was Silver Point’s professed practice to monitor and log all such communications between 

its public and private sides. 

34. Silver Point’s barrier policy also required Compliance to maintain a “watch list” 

and a “restricted list” to track the firm’s investments and levels of knowledge.  Compliance 

placed an issuer on the restricted list when the public side learned MNPI about that issuer.  Silver 

Point was prohibited from trading in securities of issuers on the restricted list.   

35. The watch list, on the other hand, included issuers about which only the private 

side had Confidential Information.  This list was only accessible to Compliance because, as is 

explained in the barrier policy, “the very fact that Private Employees are working on a particular 

financing or other transaction may constitute [MNPI].”  As such, Compliance’s involvement in 

preapproving and monitoring discussions between public and private sides was critical. 

36. Reflecting the substantial risk in Silver Point’s business model that the private 

side may pass MNPI to the public side, the barrier policy also dictated physical separation 

between the public and private sides within Silver Point’s office space, with key card access 

required for the private side space.  Private side employees were prohibited from having any 

investment-related conversations or meetings with, or in the physical presence of, public side 

employees while in the office.    

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37. Consistent with Fortgang’s function at Silver Point and the heightened risk 

attendant to his role, he agreed to be bound by the barrier policy.  Specifically, his consulting 

agreement mandated that he “comply with all of [Silver Point’s] compliance policies and 

procedures, including, without limitation, the [barrier policy]….” 

38. Indeed, in at least two instances, Compliance did monitor and log Fortgang’s 

communications with public side employees, as required by the barrier policy, categorizing him 

as a “Private Employee” in the log.  Silver Point also, at times, placed or kept an entity on its 

watch list (thus triggering additional monitoring) when only Fortgang had MNPI about the 

entity.  But these few instances were the exception to the rule.  

D. Silver Point’s Policies and Procedures Were Deficient  

 

39. Silver Point failed to establish and adopt written policies and procedures 

reasonably designed to prevent the misuse of MNPI in light of its public/private business model 

and Fortgang’s unique and critical role within the firm.   

40. Specifically, Silver Point’s barrier policy did not clearly require that consultants 

like Fortgang, who regularly sat on creditors’ committees and received MNPI, be subject to the 

same oversight and controls as private side employees who also sat on creditors’ committees and 

received MNPI.  Instead, Silver Point’s barrier policy was, at best, ambiguous—stating only that 

consultants like Fortgang may be designated as private employees, without providing any criteria 

for Compliance to use to determine when to do so.  

41. Silver Point’s deficient policies and procedures meant Fortgang’s interactions 

with the public side went largely unpoliced by Compliance, notwithstanding Fortgang’s routine 

exposure to MNPI as Silver Point’s creditors’ committee representative, his near-constant 

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contact with members of the public side, and the incentives created by his performance-based 

compensation.    

E. Silver Point Failed to Enforce the Barrier Policy as to Fortgang and His Activities  

 

42. Silver Point’s enforcement of the barrier policy as to Fortgang was also deficient.   

43. Based on Fortgang’s role and his routine access to MNPI on Silver Point’s behalf, 

he functioned as, and should have been designated by Compliance as, a private employee for 

purposes of applying the barrier policy to him.  However, Silver Point failed to treat or designate 

him as such, notwithstanding his express agreement to be bound by the barrier policy.  By not 

designating Fortgang as a public or private employee, Silver Point allowed Fortgang to operate 

in a loophole, effectively exempting him from the public/private divide that was crucial to 

ensuring that Silver Point did not misuse of MNPI. 

44. Silver Point also did not consistently preapprove and, where appropriate, monitor 

and log Fortgang’s calls and in-person communications with the public side. 

45. Nor did Silver Point conduct email surveillance, periodic email check-ins, or 

trainings for Fortgang as it did for private side employees.   

46. Silver Point’s failure to enforce its barrier policy created a substantial risk of 

MNPI leakage from Fortgang to the public side, and therefore a risk of illegal insider trading by 

Silver Point. 

47. Silver Point’s trading in defaulted bonds issued by the Commonwealth of Puerto 

Rico (“Puerto Rico bonds”) underscores the risk created by Silver Point’s failure to establish, 

implement, and enforce policies and procedures reasonably designed to prevent the misuse of 

MNPI.   

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48. As described in more detail below, between September 17, 2019 and February 7, 

2020, Silver Point purchased over $260 million of Puerto Rico bonds.  Over the same period, 

while Fortgang was in possession of MNPI about the same Puerto Rico bonds, he had more than 

500 calls with public side employees without the involvement of Compliance.  At the very least, 

these calls should have been preapproved by Compliance pursuant to the barrier policy, so that 

Compliance could carry out its obligation to determine whether to approve, monitor and/or log 

the calls.       

49. When Silver Point sold the Puerto Rico bonds it amassed during that period, it 

generated profits of over $29 million.  

50. Silver Point’s deficient establishment and enforcement of its barrier policy as to 

Fortgang meant he had hundreds of opportunities to improperly share MNPI with the public side, 

presenting a substantial risk that Silver Point generated such profits by trading on the basis of 

MNPI.   

Holes in Silver Point’s Barrier:  The Puerto Rico Bankruptcy Example 

51. In 2015, the Commonwealth of Puerto Rico (“Puerto Rico”) experienced a 

financial collapse that resulted in it defaulting on a substantial part of its outstanding debt.  In 

June 2017, a federal bankruptcy court appointed a panel of federal judges to conduct a mediation 

between Puerto Rico and its creditors to reach an economic resolution on recoveries for creditor 

bondholders.  The court order appointing the mediators specified that the participants and the 

mediators would be bound by confidentiality.  

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52. From at least September 17, 2019 through February 9, 2020 (the “relevant 

period”), Silver Point participated in the confidential mediation as a member of an “ad hoc” 

creditors’ committee comprised of Puerto Rico bondholders.1   

53. During that same period, Silver Point was a signatory to a mediation agreement 

that obligated it to keep confidential “all Proposals, views, conduct, and statements made, 

whether oral or written, and any information, or graphic or physical evidence offered in the 

course of the mediation (or in advance of the mediation if so designated).”  The agreement 

warned that “there are applicable securities laws or regulations that may, depending on the 

circumstances, prohibit the purchase and sale of securities by persons who possess MNPI.”   

54. Fortgang was Silver Point’s sole representative in the confidential mediation for 

most of the relevant period.  On Silver Point’s behalf, he attended mediation sessions and 

participated in calls with other creditors, the mediator, and representatives of Puerto Rico, 

offering Silver Point’s perspective on the economic terms of any deal and serving as its primary 

negotiator.  He also received settlement proposals circulated amongst the parties and nonpublic 

information about Puerto Rico’s financial position—much of which constituted MNPI and was 

marked as such.  

55. Silver Point assigned Fortgang to this role (rather than a public side analyst well-

versed in Puerto Rico bonds), so that its public side could rely on the information barrier to 

continue to trade Puerto Rico bonds while the mediation was ongoing (and while Silver Point 

had MNPI about Puerto Rico bonds).    

 
1 Ad hoc creditors’ committees (in contrast to official creditors’ committees that are established pursuant to the 

Bankruptcy Code) are self-formed groups of creditors that coordinate amongst themselves and with the debtor on 

the implementation of a restructuring.  Ad hoc committees, like official committees, seek to influence the outcome 

of a bankruptcy case in favor of similarly situated creditors. 

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56. Silver Point’s use of an information barrier and continued trading in Puerto Rico 

bonds while it was in possession of MNPI about Puerto Rico bonds (through Fortgang) was 

unique amongst the many other hedge fund participants to the mediation.  Other hedge funds 

involved in the mediation flatly prohibited their employees from trading in Puerto Rico bonds 

when they had MNPI from the mediation.    

57. Unbeknownst to the other participants in the mediation, the barrier policy that 

Silver Point was relying on to trade was not enforced as to Fortgang, even though he was Silver 

Point’s representative and had received MNPI from the mediation.   

58. For example, on September 17, 2019, Fortgang, alone, attended the first Puerto 

Rico mediation session on behalf of Silver Point and received MNPI about the risks associated 

with Puerto Rico’s fiscal plan.  Following the session, Compliance correctly added Puerto Rico 

to Silver Point’s watch list based on Fortgang’s receipt of MNPI. 

59. During that confidential mediation session, Fortgang had a seven-minute call with 

a member of Silver Point’s public side.  Silver Point’s barrier policy required that Compliance be 

alerted to the call.  It was not.  Because the call was not preapproved, Compliance was unable to 

determine whether it needed to be monitored and entered on the wall crossing log to ensure daily 

monitoring of trading in Puerto Rico bonds thereafter.   

60. Later that same day, the relevant members of Silver Point’s public side approved 

a trading recommendation to purchase approximately $14.5 million Puerto Rico bonds.   

61. Further, on September 19, 2019, Fortgang was present in Silver Point’s 

Greenwich, Connecticut office.  Silver Point’s barrier policy required actual physical separation 

between the public and private sides in the office.  Despite this, Fortgang was permitted to move 

unimpeded throughout the office, specifically including spaces where public side employees 

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worked—even sit next to the traders while they placed trades—without any oversight by 

Compliance, in contravention of the barrier policy.   

62. Then, on September 20, 2019, Compliance improperly removed Puerto Rico 

bonds from the watch list, despite Fortgang still possessing MNPI from his attendance at the 

September 17, 2019 mediation session.  As a result, subsequent trading in Puerto Rico bonds was 

not subject to the enhanced daily surveillance required by the barrier policy until it was added 

back to the watch list on October 25, 2019.  In fact, Silver Point made 11 purchases of Puerto 

Rico bonds on four different days, in amounts totaling over $46 million, during that 5 ½ week 

period.   

63. Fortgang continued to possess MNPI until at least October 17, 2019, when that 

information was released to the public (and thus no longer constituted MNPI).  Despite this, 

between September 17 and October 17, Fortgang had at least 123 calls with 11 different 

members of Silver Point’s public side, including four calls with the primary analyst who covered 

Puerto Rico and recommended trades in Puerto Rico bonds and 15 calls with the executive who 

approved those trading recommendations.  The barrier policy required that Compliance be 

alerted to these calls ahead of time and, depending on the nature of the calls, also log and 

monitor the calls, yet none of these things happened.   

64. Between October 25, 2019 and February 9, 2020, Fortgang received additional 

MNPI in connection with the confidential mediation, including settlement offers exchanged by 

the parties on October 25, October 30, November 5, November 7, November 8, December 16, 

and December 30.  Fortgang also attended in-person mediation sessions on November 5, 2019 

and December 16, 2019 at which MNPI was exchanged.   

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65. During this same period, Fortgang had at least 394 calls with 17 different 

members of Silver Point’s public side, including 36 calls with the primary analyst who 

recommended trades in Puerto Rico bonds and 22 calls with the executive who approved Puerto 

Rico bonds trading recommendations.   

66. For instance, on November 5, 2019, while Fortgang was physically present in a 

mediation session and had just received MNPI in the form of a settlement offer by Puerto Rico, 

Fortgang called the primary analyst who covered Puerto Rico.  The two spoke for two minutes.  

The analyst, in requesting the call, knew Fortgang was attending the mediation session and that 

MNPI would have been exchanged at the start of the mediation session, yet neither he nor 

Fortgang alerted Compliance, in contravention of the barrier policy.    

67. Indeed, the barrier policy required Compliance to preapprove all 394 calls 

between Fortgang and the public side and, potentially, monitor and log them as well.  However, 

none of the calls were preapproved, much less monitored or logged by Compliance.  As a result, 

the nature and substance of the calls is unknown.    

68.  In addition, on December 3, 2019, while Fortgang was still in possession of 

MNPI learned during the October and November 2019 negotiations, he twice called the same 

analyst who covered Puerto Rico bonds.  Later that afternoon, the analyst sent a draft trading 

recommendation to his supervisor.  The next day, Fortgang again called the analyst and the two 

spoke for four minutes.  Under the barrier policy, Compliance should have been alerted to each 

of these calls in advance, but it was not.    

69. A few hours later, the analyst circulated a final trading recommendation to 

purchase additional Puerto Rico bonds.  The recommendation was approved the same day, and, 

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between December 4 and December 12, Silver Point bought more than $54 million Puerto Rico 

bonds.   

70. On December 12, 2019, Fortgang was again in Silver Point’s office.  While 

Fortgang was present in the office, but not subject to the public/private physical separation 

required by the barrier policy, the public side analyst responsible for covering Puerto Rico bonds 

circulated a “TIME SENSITIVE” trading recommendation to purchase additional Puerto Rico 

bonds.  The recommendation was approved the following day, and Silver Point then bought a 

total of over $18 million of Puerto Rico bonds.  

71. As exemplified above, Silver Point’s barrier policy, which merely provided 

generally that consultants such as Fortgang “may” be subject to it, failed to address an obvious 

risk inherent in its business model—Fortgang’s possession of MNPI from participating on 

creditors’ committees on behalf of Silver Point for more than 17 years and his untrammeled 

access to the public side with no oversight, or even notice to the Compliance staff responsible for 

oversight.  

72. Silver Point neither established nor enforced the barrier policy as to Fortgang.  As 

a result, there was a substantial risk that Fortgang would, advertently or inadvertently, pass 

MNPI about an entity to the public side of Silver Point, thus influencing its trading decisions.  

Whether Fortgang in fact ever passed MNPI to the public side is impossible to know, precisely 

because of Silver Point’s failures.    

73. Silver Point executed a statute of limitations tolling agreement with the 

Commission on July 29, 2024, tolling the statute of limitations period for 90 days.  

 

 

 

 

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FIRST CLAIM FOR RELIEF 

Violation of Section 204A of the Advisers Act 

 

74. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 73. 

75. At all times relevant to the Complaint, Defendant, while acting as an investment 

adviser, failed to establish, implement, and enforce written policies and procedures reasonably 

designed, taking into consideration the nature of its business, to prevent the misuse in violation 

of the Advisers Act  [15 U.S.C. § 80b-1 et seq.], or the Securities Exchange Act of 1934  [15 

U.S.C. § 78a et seq.], or the rules or regulations thereunder, of material nonpublic information by 

such investment adviser or any person associated with such investment adviser.   

76. By reason of the foregoing, Defendant violated Section 204A of the Advisers Act 

[15 U.S.C. § 80b-4a]. 

SECOND CLAIM FOR RELIEF 

Violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 Promulgated Thereunder 

77. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 73. 

78. At all times relevant to the Complaint, Defendant, in violation of Section 206(4) 

of the Advisers Act and Rule 206(4)-7 thereunder, while acting as a registered investment 

adviser that provided advice to clients, failed to adopt and implement written policies and 

procedures reasonably designed to prevent violations of the Advisers Act and the rules 

thereunder. 

79. By reason of the foregoing, Defendant violated Section 206(4) of the Advisers 

Act [15 U.S.C. § 80b-6] and Rule 206(4)-7 thereunder [17 CFR § 275.206(4)-7]. 

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PRAYER FOR RELIEF 

 WHEREFORE, the Commission requests that the Court enter a Final Judgment: 

I. 

Permanently enjoining, pursuant to Advisers Act Section 209(d) [15 U.S.C. § 80b-9(d)], 

Defendant and its agents, servants, employees and attorneys and all persons in active concert or 

participation with any of them from violating, directly or indirectly, Advisers Act Sections 204A 

and 206(4) [15 U.S.C. §§ 80b-4a, 80b-6], and Rule 206(4)-7 [17 CFR § 275.206(4)-7] 

thereunder; 

II. 

Ordering Defendant to pay civil monetary penalties under Advisers Act Section 209(e) 

[15 U.S.C. § 80b-9(e)]; and 

III. 

Granting any other and further relief this Court may deem just and proper. 

  

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JURY DEMAND 

 The Commission hereby demands a trial by jury on all claims so triable.  

 

Dated: December 20, 2024   Respectfully submitted, 

/s          

Susan R. Cooke (D.C. Bar No. 978173) 

Michael C. Moran (CT phv08741, Mass. Bar No. 

666885) 

SECURITIES AND EXCHANGE 

COMMISSION 

Boston Regional Office 

33 Arch Street 

Boston, MA  02110 

[email protected] 

[email protected] 

Cooke phone: (617) 573-4538 

Moran phone: (617) 573-8931 

Facsimile: (617) 573-4590   

 

Counsel for Plaintiff Securities and Exchange 

Commission 

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