Direct Lending Fund Sued for Allegedly Inflating Returns (1)

Direct Lending Investments founder Brendan Ross attracted hundreds of millions of dollars from investors with the help of an impressive track record: consistent profits of about 1 percent a month, without fail.

It turns out those numbers were too good to be true, according to the Securities and Exchange Commission. The regulator sued Direct Lending March 22, accusing it of inflating annual returns by about 2 percent to 3 percent for years.

Direct Lending, based in Glendale, Calif., competes with banks by financing loans with money it raises from investors. At the center of the SEC’s case are allegations that ...