Even so, authorities said, the investment firm’s oversight was too weak to catch the problem before it was too late: The company’s controls were riddled with holes that rendered them inadequate to police the managers’ trading.
After the funds came apart, investigators said, the cover-up began.
Mr. Grewal said when Mr. Bond-Nelson was confronted by S.E.C. staff members about a false statement he had made, he took a bathroom break and never came back. And Mr. Taylor met with Mr. Tournant at a vacant construction site to discuss how to respond to investigators’ questions, authorities said.
Mr. Tournant, 55, voluntarily surrendered to authorities in Denver on Tuesday morning to face charges including securities fraud, conspiracy and obstruction of justice. In a statement, Mr. Tournant’s lawyers, Daniel Alonso and Seth Levine, called the case a “meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, Covid-induced market dislocation of March 2020.”
The lawyers said Mr. Tournant was on medical leave at the time and had sustained losses to the “considerable investment” he had made in the fund.
“While the losses are regrettable, they are not the result of any crime,” the lawyers said.
In addition to his criminal case, Mr. Tournant faces civil charges from the S.E.C., which already agreed to settlements with Mr. Bond-Nelson and Mr. Taylor.
“The victims of this misconduct include teachers, clergy, bus drivers and engineers, whose pensions are invested in institutional funds to support their retirement,” said the S.E.C. chairman, Gary Gensler. “This case once again demonstrates that even the most sophisticated institutional investors, like pension funds, can become victims of wrongdoing.”
