UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933 

Release No. 9326 / May 29, 2012

INVESTMENT ADVISERS ACT OF 1940

Release No. 3408 / May 29, 2012

INVESTMENT COMPANY ACT OF 1940 

Release No. 30085 / May 29, 2012 

ADMINISTRATIVE PROCEEDING

File No. 3-14893

In the Matter of

QUANTEK ASSET MANAGEMENT, LLC, 

BULLTICK CAPITAL MARKETS

HOLDINGS, LP, JAVIER GUERRA, and 

RALPH PATINO, 

Respondents. 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT 

TO SECTION 8A OF THE 

SECURITIES ACT OF 1933, SECTIONS 

203(e), 203(f), AND 203(k) OF THE 

INVESTMENT ADVISERS ACT OF 

1940, AND SECTION 9(b) OF THE 

INVESTMENT COMPANY ACT OF 

1940, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS 

AND CEASE-AND-DESIST ORDERS 

 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 

203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”), and 

Section 9(b) of the Investment Company Act of 1940 (“Investment Company Act”) against 

Quantek Asset Management, LLC (“Quantek”), Bulltick Capital Markets Holdings, LP 

(“Bulltick”), Javier Guerra (“Guerra”), and Ralph Patino (“Patino”) (collectively 

“Respondents”). 
2

II.

In anticipation of the institution of these proceedings, Respondents have submitted 

Offers of Settlement (the “Offers”) which the Commission has determined to accept. Solely for 

the purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over them and the subject matter of 

these proceedings, which are admitted, Respondents consent to the entry of this Order 

Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the 

Securities Act of 1933, Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 

1940, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and 

Imposing Remedial Sanctions and Cease-and-Desist Orders (“Order”), as set forth below. 

III.

On the basis of this Order and Respondents’ Offers, the Commission finds1 that:

Summary

This case involves a prominent Latin American-focused hedge fund adviser named 

Quantek that misled investors about three important attributes of funds that it managed: 

management “skin in the game,” the funds’ investment process, and certain related-party 

transactions. At its peak, Quantek managed over $1 billion in assets, primarily through the

Quantek Master Fund, SPC Ltd. and its two feeder funds, Quantek Opportunity Fund, L.P. and

Quantek Opportunity Fund, Ltd. (collectively the “Opportunity Funds”).

First, from 2006 through 2008, Quantek made various representations to the effect that 

its principals had “skin in the game” along with investors in the Opportunity Funds. “Skin in 

the game,” in the managed fund context, means that the adviser or its principals invest their own 

money in the fund. Many fund investors consider this an important way to align the adviser’s 

interests with their own, resulting in stronger discipline and risk management. In fact, 

Quantek’s principals never invested their own capital in the Opportunity Funds. Quantek made 

these misstatements in due diligence questionnaires and in side letter agreements executed with 

certain institutional investors. 

Second, from 2007 through 2008, Quantek misled investors about the rigor of the 

Opportunity Funds’ investment process. The funds used an asset-based lending strategy, with a 

focus on industrial and real estate ventures in Latin America. Because the funds’ loans were 

complex and illiquid, investors carefully evaluated Quantek’s process for making investments. 

Quantek told investors that all of the funds’ investments required approval by a committee of 

Quantek principals, and that the committee reviewed formal memoranda explaining each 

proposed investment before it was made. Quantek also told its largest investor that committee 

 

1

 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

binding on any other person or entity in this or any other proceeding.
3

members documented their approval by signing the memoranda. In reality, Quantek failed to 

prepare investment committee memos for numerous transactions. In 2007, the funds’ largest 

investor requested copies of the investment committee memos. Quantek responded by creating, 

backdating, and signing the missing memos, giving this investor – and others later – the 

misimpression that Quantek had been following its purportedly robust process all along. 

Third, from 2007 through 2010, Quantek provided investors with inaccurate information 

about certain related-party transactions by the funds. Because the Opportunity Funds permitted 

related-party transactions with Quantek’s parent company, Bulltick, and other affiliates, 

investors were wary of transactions that were not properly disclosed. In 2006 and 2007, the 

funds made related-party loans to an affiliate of their portfolio manager, Javier Guerra, and to 

Bulltick entities that were not properly documented or secured. Subsequently, Quantek and 

Bulltick employees prepared and backdated the missing loan documents. Quantek employees 

also created investment memos designed to appear as if they were drafted before the funds 

made the loans. These materials inaccurately described key terms of the related-party loans and 

gave the impression that the loans had been sufficiently documented and secured at all times. 

Quantek provided these misleading documents, or their substance, to the funds’ investors in

various ways. 

By its actions, Quantek violated certain antifraud, compliance, and recordkeeping 

provisions of the Advisers Act and Securities Act. Quantek’s managing principal, Guerra, and 

its former operations director, Ralph Patino, were responsible for making various 

misrepresentations on Quantek’s behalf. Bulltick was responsible for aiding and abetting and 

causing some of Quantek’s violations. 

 

Respondents

Quantek Asset Management, LLC is a Delaware limited liability company with its 

principal place of business in Miami, Florida. At all relevant times it was the investment 

adviser for the Opportunity Funds. Quantek was a wholly owned subsidiary of Bulltick from 

November 2006 until January 2009, and is now owned primarily by Javier Guerra. Quantek has 

been registered as an investment adviser since June 2007. 

Bulltick Capital Markets Holdings, LP is a Delaware limited partnership and the 

successor to Bulltick Capital Markets, LP, a Scottish limited partnership founded by Javier 

Guerra and his associates. Bulltick Capital Markets, LP was the Bulltick entity in existence at 

the time of the events described herein. It was the parent company of Quantek and two 

Commission registered broker-dealers. 

Javier Guerra, age 41, resides in Miami, Florida. At all relevant times, Guerra was the 

lead principal of Quantek and the portfolio manager for the Opportunity Funds. Guerra was a 

partner and managing director of Bulltick from 2000 until January 2009, when Bulltick and 

Quantek separated. From at least 2006 through January 2009, an entity controlled by Guerra

owned approximately 30% of Bulltick. 
4

Ralph Patino, age 46, resides in Miramar, Florida. At all relevant times, Patino was 

Quantek’s director of operations. Patino was also Quantek’s head of compliance from 

December 2006 through approximately spring 2007, when the firm began preparations to 

register. 

Other Relevant Entity

The Opportunity Funds are hedge funds created in July 2005. The funds have a 

master-feeder structure comprised of Quantek Master Fund, SPC Ltd. (offshore) and two feeder 

funds, Quantek Opportunity Fund, L.P. (onshore) and Quantek Opportunity Fund, Ltd., 

(offshore). Quantek served as investment adviser to the funds from December 2006 until 

September 2011. Prior to December 2006, the funds’ adviser was Quantek Financial (Cayman), 

Ltd. At its peak in July 2008, the Opportunity Funds had over $1 billion in assets. 

 

Facts

A. Background 

Bulltick and Guerra formed Quantek in 2006 to serve as investment adviser to the 

Opportunity Funds. The Opportunity Funds’ main investment strategy was asset-based 

lending to finance various Latin American industrial and real estate ventures. The 

Opportunity Funds grew quickly and, by mid-2008, had over $1 billion in assets and about 

seventy investors, many of which were institutional. 

Quantek and Bulltick failed to implement strong compliance practices at Quantek to 

keep pace with the funds’ rapid growth. Quantek lacked a dedicated adviser compliance 

function until spring 2008, almost a year after registering as an investment adviser. Between 

June 2007, when Quantek registered, and spring 2008, Bulltick’s chief compliance officer and 

Bulltick’s broker-dealer subsidiary compliance personnel were given responsibility for 

Quantek’s compliance, even though they had virtually no experience or training concerning 

registered investment advisers. They also lacked adequate time to perform all of their 

additional compliance responsibilities including a review of Quantek’s due diligence 

questionnaires and other correspondence with investors. 

B. Misstatements Concerning “Skin in the Game” 

 From December 2006 through at least June 2008, Quantek made representations to 

prospective investors that its principals had invested their own money in the Opportunity 

Funds. Quantek made these representations in due diligence questionnaire responses and side 

letter agreements with sought-after institutional investors.2

 These misrepresentations provided Quantek with a significant marketing benefit. 

“Skin in the game,” also known as principal co-investment, refers to an adviser’s investment 

 In fact, none of Quantek’s 

principals or affiliates had ever invested their own wealth in the Opportunity Funds. 

 

2

 Quantek did make accurate disclosures to other investors on the subject of principal co-investment. 
5

in the fund or otherwise alongside fund investors and is widely viewed as an important way to 

align a manager’s interests with its investors. Many fund investors consider principal coinvestment to be an important check on the manager, resulting in stronger investment 

discipline and risk management practices. Prospective investors frequently inquire about 

principal co-investment during their due diligence process, and many require it in their fund 

selection. 

Due Diligence Questionnaires

 Quantek made misstatements concerning its principals’ investment in the Opportunity 

Funds on due diligence questionnaires published by the Alternative Investment Management 

Association (“AIMA”). 

AIMA is an international non-profit trade association for the hedge fund industry. 

Among the many publications it provides to members is a form due diligence questionnaire 

titled, “Illustrative Questionnaire for Due Diligence Review of Hedge Fund Managers” 

(“AIMA DDQ”). This questionnaire is commonly used throughout the industry. It is 

designed to be completed by hedge fund managers and distributed to prospective investors. 

The first page of the AIMA DDQ states that the form’s purpose is to “serve as a guide to 

investors in their relations with hedge fund managers.” 

 From December 2006 through June 2009, Quantek completed several AIMA DDQs 

and provided them to prospective investors in the Opportunity Funds. 

The AIMA DDQs used by Quantek included a section titled “Management Team’s 

Co-Investment” that contained the following questions: 

What is the total amount invested by the principals/management in the 

fund and other investment vehicles managed pari passu with the fund?

Has the management reduced its personal investment?

• Date:

• Amount: 

• Reasons:

 

Quantek’s operations director and then head of compliance, Patino, was responsible for 

preparing Quantek’s AIMA DDQ to be issued in December 2006. Patino answered the first

question for Quantek by writing “$13 million.” He wrote “no” in response to the second 

question concerning management reduction of personal investment. In fact, Quantek principals 

and management had never invested in the Opportunity Funds or in any vehicle managed pari 

passu with the Opportunity Funds.3

 

3 The term pari passu is commonly used in the hedge fund industry. Its literal meaning is “of equal 

step.” Quantek investors generally understood pari passu, in this context, to capture other investment vehicles 

 Accordingly, Patino and Quantek’s “$13 million” answer 

was incorrect. The correct response was “zero.” 
6

At the time he answered the AIMA DDQ Management Team Co-Investment questions, 

Patino did not know the meaning of the term pari passu and spent very little time researching its 

definition. Under an erroneous belief, Patino improperly counted certain unrelated investments 

as if they were investments made pari passu with the Opportunity Funds. Patino sent the 

completed draft AIMA DDQ answers to others at Quantek, including Guerra, for review and 

comment. Later, Guerra sent Quantek’s AIMA DDQ responses to a prospective investor. That 

prospective investor subsequently invested approximately $2 million in the Opportunity Funds. 

Following the template set by Patino, Quantek and its third-party marketers provided 

prospective investors with the incorrect AIMA DDQ responses from December 2006 through 

June 2008. During that time, Patino and others at Quantek reduced the amount of Quantek’s 

purported principal/management investment that was reported on AIMA DDQs from $13 

million to $10 million in June 2007, and then to $7 million in December 2007. The correct 

answer, however, was always “zero.” Furthermore, even though Quantek reduced the amount 

of its purported principal co-investment, it consistently answered “No” to the question asking if 

Quantek management had reduced their personal investment. 

The Opportunity Funds’ investors who received AIMA DDQs continued to believe that 

Quantek’s principals had a co-investment in the funds. 

After Quantek registered as an investment adviser in June 2007, nearly a year passed 

before anyone reviewed the firm’s AIMA DDQ responses for accuracy. During that period, 

Quantek did not have its own compliance staff. Bulltick and Guerra undertook to provide 

compliance resources to Quantek so it could meet its regulatory compliance obligations. 

Therefore, from June 2007 through spring 2008, Quantek and Bulltick shared compliance 

department employees, including a chief compliance officer. However, these shared employees 

had virtually no registered investment adviser compliance experience and were not properly 

trained in investment adviser regulatory issues. The employees also lacked sufficient time to 

review the AIMA DDQs because they were responsible for all compliance work at two Bulltick

owned broker-dealers and Quantek, which by December 2007 was managing two separate 

hedge funds and almost $1 billion in assets. 

Eventually, in May 2008, Quantek hired a senior compliance manager with investment 

adviser compliance experience. He reviewed its AIMA DDQ responses and concluded that 

they should be changed. Accordingly, in an updated AIMA DDQ response dated June 2008, 

Quantek changed its principal/management investment answer to “N/A.” In June 2009, 

Quantek changed this response again to “Zero.” Quantek similarly changed its answer to the 

second part, concerning management reduction of personal investment, from “No” to “N/A.” 

 Quantek also provided a prospective investor with misleading information about 

principal co-investment in the Opportunity Funds on another type of due diligence 

 utilizing the same strategy and style as the Opportunity Funds so that their value rose or fell in unison with the 

Opportunity Funds.

 
7

questionnaire. In December 2006, a prospective Opportunity Funds investor asked Quantek 

to complete a separate due diligence questionnaire titled, “Operational Due Diligence 

Questionnaire for Prospective Managers” (“Operational DDQ”). The Operational DDQ stated 

in capital letters on its first page:

THIS QUESTIONNAIRE IS AN INTEGRAL PART OF OUR DUE 

DILIGENCE PROCESS, NO INVESTMENT DECISIONS CAN OR 

WILL BE TAKEN, WITHOUT THE SUPPORT OF THIS 

COMPLETED DOCUMENT. 

It contained the question: “Do the partners and employees have investments in the fund? 

Please provide as much information as possible.” In response, Quantek stated that “[t]he 

Directors of the Manager have position of (sic) the fund, which represents a significant 

portion of their wealth.” Quantek answered another query, which sought a description of the 

Opportunity Funds’ investor base, by indicating that investments from Quantek principals 

accounted for 17% of the funds’ assets. Quantek personnel prepared these inaccurate 

responses based on the firm’s incorrect AIMA DDQ answers. In fact, none of Quantek’s 

principals had invested in the Opportunity Funds. Less than two months after it received 

Quantek’s misleading AIMA DDQ and Operational DDQ answers in December 2006, the 

prospective investor made a $2.5 million investment in the Opportunity Funds. 

Side Letter Agreements with Institutional Investors 

 In early 2007, two large institutional investors were considering investments in the 

Opportunity Funds. During the course of due diligence, one investor received Quantek’s 

inaccurate AIMA DDQs concerning principal/management co-investment. The other investor 

received the same inaccurate information during a site visit to Quantek’s offices. As a result, 

both investors operated with the understanding that Quantek’s principals maintained a coinvestment in the Opportunity Funds. Before investing, both investors separately sought 

assurances that they would be notified promptly if Quantek’s principals significantly reduced 

their investments in the Opportunity Funds. 

To memorialize their requirements, both investors sought and obtained side letter 

agreements from Quantek. The side letter with the first investor stated: 

[Quantek] . . . agrees to (i) provide 2 business days written notice . . . 

and (ii) waive the standard notice period and accelerate the redemption 

date . . . if . . . Javier Guerra withdraws 20% or more of his investment in 

the Fund . . . . 

The side letter with the second investor contained similar provisions in the event that 

“Quantek principals” redeemed 25% percent or more of their investment in the Opportunity 

Funds. Guerra executed both side letter agreements on behalf of Quantek and the Opportunity 

Funds. 
8

These side letter agreements implied that Quantek’s principals, including Guerra, had 

investments in the Opportunity Funds when in fact they did not. After receiving these side 

letters, the two investors allocated nearly $100 million in combined capital to the Opportunity 

Funds. 

C. Misrepresentations Concerning Investment Process

Quantek’s investment process for the Opportunity Funds was particularly important to 

investors. Unlike funds that traded liquid securities on a public exchange, the Opportunity 

Funds made unique private investments that were illiquid. The funds’ loans typically were 

secured by tangible assets or cash flows, and were subject to foreign law. In addition, Quantek 

was a relatively new adviser without an established performance record. For these reasons, 

many investors carefully evaluated Quantek’s process for making investments on behalf of the 

Opportunity Funds. 

Quantek’s Stated Investment Process

Quantek’s primary seed investor in the fall of 2006 was a large institutional hedge fund 

(“Seed Investor”). The Seed Investor made a number of requests that it wanted Quantek to 

satisfy before it would invest in the Opportunity Funds. One such request was that Quantek 

adopt a robust investment approval process. At the Seed Investor’s request, Quantek formalized 

its investment process so that a committee would make investment decisions for the funds. This 

investment committee was comprised of five members: Guerra (chairman), two other Bulltick 

partners, Patino, and another senior Quantek employee. 

According to the funds’ offering documents, Quantek was to rely on the investment 

committee when making investment decisions for the funds, and all investments required 

approval from at least four committee members. Guerra assured the Seed Investor that all 

Opportunity Funds investments would be approved in advance by the investment committee, 

and that the committee would memorialize its decisions. Once Quantek committed to 

implementing this process, the Seed Investor allocated tens of millions of dollars to the 

Opportunity Funds. 

Quantek made additional representations to prospective investors about its investment 

approval process. Beginning in December 2006, Quantek stated in AIMA DDQ responses and 

elsewhere that, as part of the approval process, a formal investment memorandum was prepared 

and presented to the investment committee for final consideration before each investment was 

made. These memoranda were to describe the proposed transactions and ask the investment 

committee to approve them. Patino also told the Seed Investor in June 2007 that when the 

investment committee approved a transaction, its members who voted for approval executed the 

investment memo for that transaction. Patino further indicated that there was no need for 

Quantek to prepare minutes of investment committee meetings because executed investment 

memos performed the same function. The investment memos, among other purposes, served to 

memorialize the decisions of the investment committee as part of the process Quantek promised 

the Seed Investor it would follow. 
9

Failure to Follow Stated Investment Process

The Opportunity Funds grew very quickly. In mid-2006, the funds had about $10 

million in assets and three investors. By June 2007, the funds had approximately $635 million 

in assets and almost 60 investors. The Opportunity Funds’ rapid growth, however, coincided 

with a period of great disorganization at Quantek. Quantek had no standard procedure for 

maintaining the Opportunity Funds’ investment documents and did not keep them in a 

centralized location. Many times Quantek employees could not readily locate investment 

documentation for reference. 

Quantek’s growth and disarray had an impact on the Opportunity Funds’ investment 

approval process. During the first six months of 2007, Quantek repeatedly failed to follow the 

process that it had described to investors and prospective investors. Specifically, Quantek made 

at least fifteen investments for the Opportunity Funds without first preparing and submitting a 

memorandum to the investment committee. These investments accounted for about $350 

million, or more than half, of the Opportunity Funds’ total portfolio value by June 2007. 

The Seed Investor had a practice of conducting periodic due diligence reviews of the 

Opportunity Funds’ portfolio. During one of these reviews in June 2007, a director of the Seed 

Investor asked Patino, Guerra, and others at Quantek for copies of the investment memoranda. 

None of the Quantek employees responded candidly that many of the investment memos did not 

exist. Instead, Quantek held off the Seed Investor to allow time for employees to prepare the 

missing investment memos. The newly-created memos described past Opportunity Funds 

investments in the future tense and purported to seek committee approval for deals that had 

already occurred. The memos also gave the impression that the committee’s review and 

approval process was far more rigorous than it actually was. Guerra knew that Quantek

employees were preparing after-the-fact investment memos for the Seed Investor in this way. 

Nevertheless, Guerra signed the memos along with other committee members so that Quantek 

could provide the Seed Investor with fully executed copies. Quantek provided these memos to 

the Seed Investor in June 2007. As a result, for the fifteen transactions in question, Quantek 

gave the Seed Investor the erroneous impression that the memos were authentic in describing

the investment process and committee action. 

Quantek generally prepared timely investment memoranda for investments made after 

June 2007. However, through the fall of 2007, Quantek personnel continued drafting after-thefact memoranda for investments made prior to June 30, 2007. In addition, Quantek personnel 

provided the misleading memos to other investors and prospective investors conducting due 

diligence reviews of Opportunity Funds investments. The memos suggested that Quantek was 

following a robust, documented investment process, when in fact Quantek had frequently 

deviated from that process. 

D. Misrepresentations Concerning Related-Party Transactions

The Opportunity Funds’ asset-based lending strategy presented potential conflicts of 

interest between the funds and Quantek’s affiliates, including its Bulltick parent company. 

Bulltick sometimes originated potential investments for the Opportunity Funds. Recognizing 
10

this, the funds’ offering documents permitted them to make transactions with Bulltick and other 

Quantek affiliates, including companies owned by Guerra. However, the Opportunity Funds’ 

investors were wary of related-party transactions between the funds and Quantek’s affiliates. 

In 2006 and 2007, the Opportunity Funds made related-party loans to Bulltick entities

and a separate Guerra-controlled company that were not properly documented or secured by 

collateral under the loan terms. Subsequently, Quantek and Guerra provided investors with 

misleading information about the timing and terms of these loans. Bulltick assisted Quantek 

and Guerra by creating written agreements for the loans that did not reflect the actual 

transactions and by permitting its subsidiaries to execute those agreements. 

 

The “Equus” Loan

 In August 2006, Guerra exercised his authority as portfolio manager to direct the 

Opportunity Funds to make an $800,000 loan to a company he controlled for a real estate 

investment in New York City. The loan was reflected in the Opportunity Funds’ records and 

repaid in full with interest by Guerra’s affiliate company in 2008. However, Quantek and 

Guerra did not properly document the loan at the time it was made. 

Before executing a loan agreement, Guerra wanted to ensure that the loan did not have 

negative tax implications for the Opportunity Funds. In early 2007, after these tax issues were 

resolved, Guerra signed a loan agreement on behalf of the Opportunity Funds. The underlying 

real estate investment was made by the Guerra-controlled company and had nothing to do with 

Bulltick or its subsidiaries. However, the loan agreement that Guerra executed inaccurately 

stated that the Opportunity Funds had made the loan to an entity called Equus Capital Partners, 

LP (“Equus”), which was a Bulltick subsidiary. The loan agreement also stated – incorrectly – 

that the loan was secured by “commissions” that Equus anticipated receiving, when in fact

Equus’s business did not actually involve the receipt of commissions. The agreement bore the 

date on which the loan was made in August 2006, rather than the date when the loan agreement 

was prepared and executed in 2007. 

Guerra arranged for other Bulltick partners to execute the loan agreement and a 

similarly inaccurate loan note on behalf of Equus. As a result, Bulltick permitted its Equus 

subsidiary to enter into a related-party loan agreement with the Opportunity Funds that did not 

reflect the actual transaction. Instead of the loan documentation properly reflecting the funds’ 

$800,000 unsecured loan to Guerra’s affiliate, the documents showed that the funds had made a 

nondescript secured loan to a Bulltick subsidiary called Equus. 

Quantek and Guerra provided investors with untrue information about the loan. From 

June 2007 through July 2008, Quantek sent investors portfolio reports that referenced an 

“Equus” investment, even though the loan had nothing to do with Equus. For much of that time 

period, the same portfolio reports stated that the “Equus” investment was in Latin America

when, in fact, Guerra’s affiliate company received the loan and used it to purchase a building in 

New York City. In November and December 2007, Guerra personally provided some of the 

funds’ investors with portfolio statements repeating the inaccurate borrower and collateral 

information in the backdated Equus loan documents. In January 2010, Quantek further
11

provided the inaccurate loan documents to a forensic accounting firm retained by a committee 

of large investors in the Opportunity Funds to evaluate the funds’ related-party loans. 

Inaccurate information about the Opportunity Funds’ loan to Guerra was also reflected on 

Quantek’s internal records including its general ledger and trial balance for the Opportunity 

Funds. 

The ERV Loan

Quantek and Guerra misled investors about another related-party transaction, a loan 

from the Opportunity Funds to an inactive Bulltick subsidiary called ERV Investments, LLC 

(“ERV”). Bulltick provided assistance by creating written agreements for the loan that did not 

reflect the actual transactions and permitting its subsidiaries to execute those agreements. 

 

In March 2007, the Opportunity Funds made a $10 million related-party loan to ERV. 

The purpose of the loan was to enable Bulltick, through the ERV special purpose vehicle, to 

provide initial capital to a new hedge fund that Quantek was forming. The loan documentation 

was executed by Guerra (on behalf of the funds) and other Bulltick partners (on behalf of ERV). 

To secure repayment of the Opportunity Funds’ $10 million loan, Bulltick pledged its 

ownership shares of ERV as collateral. However, ERV had no assets, no cash flows, and no

other value apart from the loan proceeds it had just received. 

After receiving the loan, Bulltick caused ERV to make a $7 million investment in the 

new hedge fund. The rest of the $3 million in loan proceeds were transferred to Bulltick and 

used for working capital. At this point, the Opportunity Funds’ original $10 million loan was 

under-secured by the ERV shares because ERV’s only asset was the $7 million subscription in 

the new fund. 

In June 2007, Bulltick caused ERV to assign the Opportunity Funds’ loan to Bulltick

itself, along with the $7 million subscription in the new hedge fund. Bulltick was now the 

borrower while ERV was once again an empty vehicle. However, in the loan assignment 

process, Bulltick failed to modify the original security agreement to ensure that valuable 

collateral would secure the funds’ loan. Instead, the only collateral securing the loan was 

Bulltick’s ownership stake in ERV, which was worthless. As a result, the Opportunity Funds’ 

original loan to ERV was effectively unsecured. Bulltick ultimately repaid the loan in full with 

interest in 2009. 

Guerra and Quantek provided the Opportunity Funds’ investors with erroneous 

information about the ERV loan collateral. In June 2007, Guerra and the other investment 

committee members signed a backdated investment memo incorrectly stating that the loan was 

to be secured by Bulltick shares, when in fact it was secured by ERV shares. The difference 

was material, because ERV had no value at that time. The memo also stated that Bulltick would 

hold $3 million of the loan proceeds as a “cash collateral agent,” when in fact Bulltick had 

already used the $3 million for its working capital. Quantek personnel provided this memo to 

various investors in the funds. Moreover, in November and December 2007, Guerra sent 

investors portfolio reports stating incorrectly that the loan collateral was shares of ERV worth 
12

$7.5 million, the value of the new hedge fund investment. In fact, the ERV shares had no value

because the fund investment had been assigned to Bulltick. 

 

Finally, in June 2008, Guerra and other Bulltick partners signed backdated assignment 

and pledge agreements for the Opportunity Funds’ loan to ERV. In spring 2008, Bulltick 

personnel discovered that the documents assigning the loan from ERV to Bulltick had not been 

finalized. Bulltick attempted to remedy the problem by preparing backdated assignment and 

pledge agreements. Those documents incorrectly indicated that the ERV loan had been 

assigned to Bulltick and secured by Bulltick shares as early as June 2007. In this manner, 

Guerra, Quantek, and Bulltick made it appear as if the Opportunity Funds’ loan to ERV was 

properly documented and secured with valuable collateral at all times. In September 2008, 

Quantek provided these loan documents to a prospective investor that was conducting due 

diligence on the funds’ related-party transactions. In January 2010, Quantek also provided 

these documents to a forensic accounting firm that had been retained by a group of the 

Opportunity Funds’ investors specifically to evaluate the funds’ related-party loans.

Violations

Sections 17(a)(2) and 17(a)(3) of the Securities Act 

Section 17(a)(2) of the Securities Act specifically prohibits obtaining money or property 

by means of any untrue statements of material fact or material omissions in the offer or sale of 

securities. Section 17(a)(3) prohibits engaging in any transaction, practice, or course of 

business which operates as a fraud or deceit upon the purchaser in the offer or sale of securities. 

Establishing violations of Sections 17(a)(2) and 17(a)(3) does not require a showing of scienter; 

negligence is sufficient. Aaron v. SEC, 446 U.S. 680, 697 (1980); SEC v. Hughes Capital 

Corp., 124 F.3d 449, 453-54 (3d Cir. 1997). 

As a result of the conduct described above, Quantek and Guerra willfully4 violated 

Sections 17(a)(2) and 17(a)(3) of the Securities Act, and Patino willfully violated Section

17(a)(3) of the Securities Act. 

Section 206(4) of the Advisers Act and Rule 206(4)-8 Thereunder

Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder prohibit investment 

advisers from engaging in any act, practice, or course of business which is fraudulent, 

deceptive, or manipulative, and from making any untrue statement of a material fact or omitting 

to state a material fact necessary to make the statements made, in light of the circumstances 

under which they were made, not misleading to investors or prospective investors in a pooled 

investment vehicle. Scienter is not required to establish a violation of Section 206(4) and Rule 

206(4)-8. 

 

4 A willful violation of the securities laws means merely “‘that the person charged with the duty knows 

what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 

969, 977 (D.C. Cir. 1949)). 
13

As a result of the conduct described above, Quantek and Guerra willfully violated 

Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, and Patino willfully aided 

and abetted and caused Quantek’s violations of Section 206(4) of the Advisers Act and Rule 

206(4)-8 thereunder. 

As a result of the conduct described above, Bulltick willfully aided and abetted and 

caused Quantek’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 

thereunder. 

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

Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder require registered 

investment advisers to adopt and implement written procedures reasonably designed to prevent 

violations of the Advisers Act. 

Quantek willfully violated Rule 206(4)-7 by failing to implement policies and 

procedures reasonably designed to prevent the firm from making material misrepresentations to 

investors. Quantek’s compliance policies required all of its correspondence with investors and 

prospective investors to be reviewed for compliance with applicable laws and approved in 

advance by its chief compliance officer. Quantek’s compliance staff lacked sufficient time to 

review those marketing materials because of their other compliance responsibilities at Quantek 

affiliates. In addition, prior to spring 2008, Quantek’s compliance employees, including its 

chief compliance officer, had virtually no investment adviser compliance experience or training. 

As a result, Quantek’s correspondence with investors and prospective investors was not 

adequately reviewed and approved as required by its own compliance policies. 

Both Bulltick and Guerra willfully aided and abetted and caused Quantek’s violations of 

Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. Guerra was the founder and 

managing principal of Quantek as well as portfolio manager of the Opportunity Funds. Bulltick 

established Quantek to serve as its hedge fund advisory subsidiary. Guerra and Bulltick knew 

about Quantek’s regulatory compliance obligations and undertook to provide compliance staff 

for the firm. However, they assigned compliance staff to Quantek that did not have the 

necessary training, experience, and time to perform the required advisory compliance functions. 

Section 204 of the Advisers Act and Rule 204-2(a)(7)

Section 204 of the Advisers Act requires that every investment adviser registered or 

required to be registered maintain certain books and records. Rule 204-2(a)(7) requires that 

registered investment advisers “make and keep true, accurate and current . . . originals of all 

written communications received and copies of all written communications sent by such 

investment adviser[s] relating to (i) any recommendation made or proposed to be made and any 

advice given or proposed to be given, [and] (ii) any receipt, disbursement or delivery of funds 

or securities . . . .” 

Quantek willfully violated Section 204 of the Advisers Act and Rule 204-2(a)(7) 

thereunder by failing to keep true, accurate, and current originals of written communications 
14

with investors and others concerning certain of the Opportunity Funds’ related-party loans, 

whose underlying source documentation was inaccurate. 

As a result of the conduct described above, Bulltick and Guerra willfully aided and 

abetted and caused Quantek’s violations of Section 204 of the Advisers Act and Rule 204-

2(a)(7) thereunder. 

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondents’ Offers. 

Accordingly, pursuant to Section 8A of the Securities Act, Sections 203(e), 203(f), and 

203(k) of the Advisers Act, and Section 9(b) of the Investment Company Act, it is hereby 

ORDERED that:

A. Respondent Quantek cease and desist from committing or causing any violations 

and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Sections 

206(4) and 204 of the Advisers Act and Rules 206(4)-8, 206(4)-7, and 204-2(a)(7) thereunder. 

B. Respondent Guerra cease and desist from committing or causing any violations 

and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Sections 

206(4) and 204 of the Advisers Act and Rules 206(4)-8, 206(4)-7, and 204-2(a)(7) thereunder. 

C. Respondent Bulltick cease and desist from committing or causing any violations 

and any future violations of Sections 206(4) and 204 of the Advisers Act and Rules 206(4)-8, 

206(4)-7, and 204-2(a)(7) thereunder. 

D. Respondent Patino cease and desist from committing or causing any violations 

and any future violations of Section 17(a)(3) of the Securities Act and Section 206(4) of the 

Advisers Act and Rule 206(4)-8 thereunder. 

E. Respondents Quantek and Bulltick are censured.

F. Respondent Guerra be, and hereby is: 

barred from association with any broker, dealer, investment adviser, municipal 

securities dealer, municipal advisor, transfer agent, or nationally recognized 

statistical rating organization with the right to apply for reentry after five (5) 

years to the appropriate self-regulatory organization, or if there is none, to the 

Commission; and 

prohibited from serving or acting as an employee, officer, director, member of an 

advisory board, investment adviser or depositor of, or principal underwriter for, a 

registered investment company or affiliated person of such investment adviser, 
15

depositor, or principal underwriter with the right to apply for reentry after five (5) 

years to the appropriate self-regulatory organization, or if there is none, to the 

Commission. 

G. Any reapplication for association by Guerra will be subject to the applicable 

laws and regulations governing the reentry process, and reentry may be conditioned upon a 

number of factors, including, but not limited to, the satisfaction of any or all of the following: 

(a) any disgorgement ordered against Guerra, whether or not the Commission has fully or 

partially waived payment of such disgorgement; (b) any arbitration award against Guerra 

related to the conduct that served as the basis for the Commission order; (c) any self-regulatory 

organization arbitration award against Guerra to a customer, whether or not related to the 

conduct that served as the basis for the Commission order; and (d) any restitution order against 

Guerra by a self-regulatory organization, whether or not related to the conduct that served as the 

basis for the Commission order.

H. Respondent Patino be, and hereby is:

barred from association with any broker, dealer, investment adviser, municipal 

securities dealer, municipal advisor, transfer agent, or nationally recognized 

statistical rating organization with the right to apply for reentry after one (1) year 

to the appropriate self-regulatory organization, or if there is none, to the 

Commission; and

prohibited from serving or acting as an employee, officer, director, member of an 

advisory board, investment adviser or depositor of, or principal underwriter for, a 

registered investment company or affiliated person of such investment adviser, 

depositor, or principal underwriter with the right to apply for reentry after one (1) 

year to the appropriate self-regulatory organization, or if there is none, to the 

Commission.

I. Any reapplication for association by Patino will be subject to the applicable 

laws and regulations governing the reentry process, and reentry may be conditioned upon a 

number of factors, including, but not limited to, the satisfaction of any or all of the following: 

(a) any disgorgement ordered against Patino, whether or not the Commission has fully or 

partially waived payment of such disgorgement; (b) any arbitration award against Patino related 

to the conduct that served as the basis for the Commission order; (c) any self-regulatory 

organization arbitration award against Patino to a customer, whether or not related to the 

conduct that served as the basis for the Commission order; and (d) any restitution order against 

Patino by a self-regulatory organization, whether or not related to the conduct that served as the 

basis for the Commission order.

J. Respondents Quantek and Guerra, shall, jointly and severally, pay 

disgorgement of $2,056,446 and prejudgment interest of $219,585 to the Securities and 

Exchange Commission. Payment shall be made in the following installments: $1,138,016

within ten (10) days of the entry of this Order and $1,138,015 on or before October 1, 2012. If 
16

any payment is not made by the date the payment is required by this Order, the entire 

outstanding balance of disgorgement and prejudgment interest, plus any additional interest 

accrued pursuant to SEC Rule of Practice 600, shall be due and payable immediately, without 

further application. Payments shall be: (A) made by wire transfer, United States postal money 

order, certified check, bank cashier’s check or bank money order; (B) made payable to the 

Securities and Exchange Commission; (C) hand-delivered or mailed to the Securities and 

Exchange Commission, Office of Financial Management, 100 F St., NE, Stop 6042, 

Washington, DC 20549; and (D) submitted under cover letter that identifies Quantek and 

Guerra as Respondents in these proceedings, the file number of these proceedings, a copy of 

which cover letter and money order or check shall be sent to Scott Weisman, Assistant Director, 

Asset Management Unit, Division of Enforcement, Securities and Exchange Commission, 100 

F St., NE, Washington, DC 20549. 

K. Respondent Quantek shall, within ten (10) days of the entry of this Order, pay a 

civil money penalty in the amount of $375,000 to the Securities and Exchange Commission. If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

Payment shall be: (A) made by wire transfer, United States postal money order, certified check, 

bank cashier's check or bank money order; (B) made payable to the Securities and Exchange 

Commission; (C) hand-delivered or mailed to the Securities and Exchange Commission, Office 

of Financial Management, 100 F St., NE, Stop 6042, Washington, DC 20549; and (D) 

submitted under cover letter that identifies Quantek as a Respondent in these proceedings, the 

file number of these proceedings, a copy of which cover letter and money order or check shall 

be sent to Scott Weisman, Assistant Director, Asset Management Unit, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549. 

L. Respondent Bulltick shall, within ten (10) days of the entry of this Order, pay a 

civil money penalty in the amount of $300,000 to the Securities and Exchange Commission. If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

Payment shall be: (A) made by wire transfer, United States postal money order, certified check, 

bank cashier's check or bank money order; (B) made payable to the Securities and Exchange 

Commission; (C) hand-delivered or mailed to the Securities and Exchange Commission, Office 

of Financial Management, 100 F St., NE, Stop 6042, Washington, DC 20549; and (D) 

submitted under cover letter that identifies Bulltick as a Respondent in these proceedings, the 

file number of these proceedings, a copy of which cover letter and money order or check shall 

be sent to Scott Weisman, Assistant Director, Asset Management Unit, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549. 

M. Respondent Guerra shall pay a civil money penalty in the amount of $150,000

to the Securities and Exchange Commission. Payment shall be made in the following 

installments: $75,000 shall be paid within thirty (30) days of the date of this Order and another 

$75,000 shall be paid within 365 days of the date of this Order. If any payment is not made by 

the date the payment is required by this Order, the entire outstanding balance of civil penalties, 

plus any additional interest accrued pursuant to 31 U.S.C. § 3717, shall be due and payable 

immediately, without further application. Payment shall be: (A) made by wire transfer, United 

States postal money order, certified check, bank cashier's check or bank money order; (B) made 
17

payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the 

Securities and Exchange Commission, Office of Financial Management, 100 F St., NE, Stop 

6042, Washington, DC 20549; and (D) submitted under cover letter that identifies Guerra as a 

Respondent in these proceedings, the file number of these proceedings, a copy of which cover 

letter and money order or check shall be sent to Scott Weisman, Assistant Director, Asset 

Management Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., 

NE, Washington, DC 20549. 

N. Respondent Patino shall pay a civil money penalty in the amount of $50,000 to 

the Securities and Exchange Commission. Payment shall be made in the following 

installments: $25,000 shall be paid within thirty (30) days of the date of this Order and another 

$25,000 shall be paid within 365 days of the date of this Order. If any payment is not made by 

the date the payment is required by this Order, the entire outstanding balance of civil penalties, 

plus any additional interest accrued pursuant to 31 U.S.C. § 3717, shall be due and payable 

immediately, without further application. Payments shall be: (A) made by wire transfer, United 

States postal money order, certified check, bank cashier’s check or bank money order; (B) made 

payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the 

Securities and Exchange Commission, Office of Financial Management, 100 F St., NE, Stop 

6042, Washington, DC 20549; and (D) submitted under cover letter that identifies Patino as a 

Respondent in these proceedings, the file number of these proceedings, a copy of which cover 

letter and money order or check shall be sent to Scott Weisman, Assistant Director, Asset 

Management Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., 

NE, Washington, DC 20549.

O. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a 

Fair Fund is created for the disgorgement, interest, and penalties ordered herein. Regardless of 

whether any such Fair Fund distribution is made, amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, 

Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 

to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 

amount of any part of Respondents’ payment of civil penalties in this action (“Penalty Offset”). 

If the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that 

they shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 

Commission’s counsel in this action and pay the amount of the Penalty Offset to the United 

States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor 
18

Action” means a private damages action brought against one or more of the Respondents by or 

on behalf of one or more investors based on substantially the same facts as alleged in the Order 

instituted by the Commission in this proceeding.

 By the Commission.

 Elizabeth M. Murphy

Secretary