Third Friday Management, LLC and Michael E. Lewitt

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 25869 /September 29, 2023

Securities and Exchange Commission v. Third Friday Management, LLC and Michael E. Lewitt, Civil Action No. Case 9:23-cv-81332 (S.D. Fla. filed Sept. 29, 2023)

SEC Charges Investment Adviser Michael E. Lewitt with Stealing $4.7 Million from Fund Investors

On September 29, 2023, the Securities and Exchange Commission charged Michael E. Lewitt of Boca Raton, Florida and his investment advisory firm Third Friday Management, LLC (“Third Friday”) with misrepresentations and omissions concerning a material change in the investment strategy of the Third Friday Total Return Fund, L.P. (the “Fund”), the value of the Fund’s assets, and charged Lewitt with misappropriating at least $4.7 million from the Fund for his personal benefit. Lewitt is Third Friday’s sole managing member and majority owner.

According to the SEC's complaint, from at least 2012, Third Friday and Lewitt marketed and represented to investors in the Fund’s Private Placement Memorandum that the Fund used a “strategy of selling straddles on the S&P 500 Index over a portfolio of income generating securities.” The complaint alleges that in January 2018 Third Friday suddenly changed course without disclosing to investors, many of whom were elderly, that it had begun making loans to a distressed (now bankrupt) company that acquired and operated struggling rural hospitals. As alleged, between January 2018 and November 2019, the Fund made 45 separate loan advances totaling more than $19 million to that company. The complaint further alleges that from January 2018 through March 2020, Third Friday and Lewitt made material misrepresentations and omissions, and failed to disclose the change in investment strategy and value of investments, Lewitt’s conflict of interest, and related risks to investors and prospective investors. As alleged in the complaint, Lewitt, with sole authority over the Fund, also misappropriated at least $4.7 million from the Fund for his personal use.

The SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, charges Third Friday and Lewitt with violating the antifraud provisions of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”). The complaint further charges Third Friday with violating, and Lewitt with aiding and abetting Third Friday’s violation of, Sections 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-8 thereunder. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil money penalties against Third Friday and Lewitt and a conduct-based injunction and officer and director bar against Lewitt.

The SEC’s investigation was conducted by Steven J. Meiner and Mark Dee of the Miami Regional Office and was supervised by Jessica M. Weissman and Glenn Gordon. The SEC’s litigation will be led by Pascale Guerrier and supervised by Teresa Verges.

• SEC Complaint