UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 83069 / April 19, 2018

ADMINISTRATIVE PROCEEDING

File No. 3-18348

In the Matter of

GEMINI FUND SERVICES, 

LLC, 

Respondent.

ORDER DIRECTING PAYMENT OF 

CERTAIN FUNDS RECEIVED BY THE 

COMMISSION AND DIRECTING 

TRANSFER OF REMAINING FUNDS TO 

THE U.S. TREASURY

On January 22, 2018, the Commission simultaneously instituted and settled a cease and 

desist proceeding against Gemini Fund Services, LLC (“Gemini” or the “Respondent”).1 The 

proceeding arose out of Gemini’s role as fund administrator for a Massachusetts-based 

investment company called the GL Beyond Income Fund (the “GL Fund”). Gemini was 

responsible for calculating the GL Fund’s daily share price (also called a “net asset value” or 

“NAV”) and transmitting it to the investing public, via the NASDAQ securities exchange. From 

February 2013 to December 2014, the NAV that Gemini gave to NASDAQ was inflated because 

Gemini included in the NAV fake assets that were purportedly worth over $15 million but were 

actually worth nothing. Although Gemini did not know that these assets were fake at the time it 

was calculating the NAV, Gemini did know that, for months at a time, the GL Fund’s custodian 

bank (a financial institution that holds customers’ securities for safekeeping) did not have 

adequate proof of the existence of many of these fake assets, and that there were therefore 

significant discrepancies between Gemini’s own records and those of the custodian bank. When 

confronted with this fact, Gemini failed to take any further steps, such as further investigating the 

problem with the assets, notifying the investing public or the board of directors of the GL Fund 

that the custodian bank did not have proof of the validity of the assets, or reducing the share 

price to reflect this problem. 

In the OIP, the Commission found that Gemini was a cause of Thibeault and GL 

Capital’s violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The 

Commission ordered the Respondent to pay disgorgement of $147,334, prejudgment interest of 

 

1

 Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 203(k) of the Investment Advisers Act of 

1940, Making Findings, and Imposing a Cease-and-Desist Order, Adviser Act Rel. No. 4847 (Jan 22, 2018) (“OIP”).
2

$14,072, and a civil penalty of $400,000 to the Commission within 10 days of the entry of the 

OIP and created a Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as 

amended. The Commission also ordered Gemini to engage an independent compliance 

consultant.

After receipt of the disgorgement, interest, and penalty amounts referenced above, the 

Commission staff will distribute a payment to GL Fund of the amount in the Fair Fund minus a 

reserve for taxes and related administrative expenses. The Commission staff will issue payment 

to the GL Fund upon receipt of a certification: (i) that the distribution payment is designated 

solely for affected investors and will not be used for administrative or management fees; and (ii)

that the GL Fund will make commercially reasonable efforts consistent with its legal, fiduciary, 

and contractual duties, as applicable, to disburse the Fair Fund payment to its victim investors in 

accordance with this Order. The Trustees of the GL Fund have agreed to make payments to 

those victim investors, provide a written report and evidence of such payments to Commission 

staff, and return any undistributed funds to the Commission.

The payment of disgorgement, prejudgment interest, and civil penalty constitutes a 

qualified settlement fund (“QSF”) under section of 468B(g) of the Internal Revenue Code (IRC), 

26 U.S.C. Section 468B(g), and related regulations, 26 C.F.R Sections 1.468B-1 through 

1.468B-5. The Commission staff will seek the appointment of a tax administrator to establish a 

reserve for taxes and related administrative expenses. After establishing and withholding the 

reserve, the remaining amount in the Fair Fund will be transferred to the GL Fund for 

distribution to affected investors.

Accordingly, it is ORDERED that:

A. After the receipt of the funds simultaneously ordered in this proceeding, a tax 

administrator will be appointed to establish a reserve for taxes and administrative expenses.

B. After withholding the reserve amount, the remaining Fair Fund shall be disbursed 

to the GL Fund for distribution to affected investors upon receipt of a certification from the GL 

Fund (i) that the distribution payment is designated solely for affected investors and will not be 

used for administrative or management fees; and (ii) that the GL Fund will make commercially 

reasonable efforts consistent with its legal, fiduciary, and contractual duties, as applicable, to 

disburse the Fair Fund payment to its affected investors. The GL Fund also will provide a written 

report and evidence of such payments to the Commission staff within 180 days after the receipt 

of the Fair Fund payment.

C. Any undistributed funds be returned to the Commission for remittance to the 

general fund of the United States Treasury subject to Exchange Act Section 21F(g)(3). 

By the Commission.

Brent J. Fields

Secretary