(Bloomberg) -- A former trader at shuttered hedge fund Marinus Capital Advisors was accused by the SEC of swindling millions from investors despite being barred from the industry in 2019.

Swapnil Rege started a new company and raised $10 million from investors after he was fired from Marinus in 2017 and even after he agreed to an industry ban to resolve 2019 charges that he artificially inflated his positions on derivatives to earn himself a higher bonus at the fund, the regulator said in a suit filed Tuesday in federal court in New Jersey.

The Securities and Exchange Commission said Rege, 46, promised investors in his company, SwapStar Capital LLC, returns of up to 60% but used most of the money to pay back other clients and for personal expenses, including the legal fees he incurred during the earlier government probe. 

John J. Jenkins, a lawyer representing Rege, didn’t immediately respond to a message left at his office.

‘Left With Nothing’

The regulator said Rege owes clients about $9.3 million but that he only had a total of $4.9 million in various bank accounts at the end of September. 

“Within the last several weeks, as regulators and his clients confronted Rege about his investment advisory activities that violated the bar issued by the commission and questioned him about the use of client proceeds, Rege returned money to some clients while leaving others with nothing,” the SEC said in its suit. 

Rege admitted no wrongdoing in his 2019 settlement with the SEC and the Commodity Futures Trading Commission. He paid $800,000 in addition to agreeing to a bar on acting as an investment adviser. 

While the SEC didn’t name the hedge fund that employed Rege at the time of the alleged mis-marking, Bloomberg reported in 2017 that Marinus Capital’s founder, Najib Canaan, closed the fund after an internal probe into whether Rege, an employee at the time, misled management. Canaan reported the findings from the internal probe to the SEC, Bloomberg reported, citing people with knowledge of the matter. 

In its suit Tuesday, the SEC said several clients had said they had no idea Rege had been barred from the industry and wouldn’t have invested with him if they knew. 

The case is Securities and Exchange Commission v Rege, 21-cv-19313, U.S. District Court, District of New Jersey (Newark.)

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