December 26, 2005

Hedge Funds Settle Fraud Case, Pay Hefty Amount

According to federal and state regulators, two Texas hedge funds, their investment adviser and two executives have reportedly given their consent to pay a combined US$37.7 million to settle charges of fraudulent market timing and late trading in mutual funds. Veras Capital Master Fund; VEY Partners Master Fund; their investment adviser, Veras Investment Partners LLC; and its managing members, Kevin Larson and James McBride, have agreed to settle without admitting or denying any of the wrong acts.

This case was filed jointly by the U.S. Securities and Exchange Commission, New York Attorney General Eliot Spitzer and the Commodities Futures Trading Commission. reuters reports:

The SEC said Veras used "deceptive techniques" when conducting inappropriate mutual fund trades from January 2002 through September 2003, including attempts to hide its true identity from mutual funds. "By using deceptive means to late trade and market time mutual funds, Veras profited illegally and at the expense of ordinary investors," Merri Jo Gillette, director of the SEC's Midwest Regional Office, said in a statement. An attorney for the hedge funds and the adviser declined to comment.

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December 26, 2005 in Regulation | Permalink




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