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Category Archives: Hedge Fund Fraud

SEC Prosecuting Via ALJ Hearings

August 5, 2014 Dear Friends, As reported by the Wall Street Journal, the SEC is increasingly prosecuting wrongdoers in hearings before administrative law judges, rather than jury trials, where the SEC has recently lost a number of cases. Please click here for the Wall Street Journal article written by Russell Ryan, a former assistant director of enforcement at the SEC. […]

SEC Announces Whistleblower Award

  Dear Friends, Yesterday, the SEC announced an award of over $400,000 for a whistleblower who reported a fraud to the SEC, after the company failed to address the issue internally. According to the SEC, the whistleblower “did everything feasible to correct the issue internally,” and provided the Commission with specific, timely and credible information, allowing for a more rapid […]

SEC Sweep on Alternative Mutual Funds Imminent

Dear Friends, The SEC will begin its sweep exams of alternative mutual funds  “this summer or fall,” said Norm Champ, Director of the SEC’s Division of Investment Management, focusing on the following areas: Liquidity: Ability to satisfy investor redemption requests in a timely manner and compliance with liquidity thresholds – no more than 15% of net assets in illiquid securities […]

SEC Charges Golf Buddies in Insider Trading Ring

July 15, 2014 Dear Friends, The SEC charged a group of golfers with trading on material non-public information (MNPI), resulting in over $500,000 in illegal profits. The golfers must return their ill-gotten gains, with interest, and pay penalties of up to three times their gains. The MNPI source belonged to the same country club as the ringleader, who fed the […]

SEC Provides Guidance on Accredited Investor Verification

Dear Friends, The SEC has issued guidance on accredited investor verification methods for managers engaging in a general solicitation.  Specifically, the SEC narrowed its list of non-exclusive safe harbor verification methods as follows: Income: (a) If tax documents reflecting the purchaser’s income for the two most recent years are not yet available, the issuer could rely on IRS forms for the two most […]

SEC Charges Traders with Reg. M Violations

July 2, 2014  Dear Friends,  Today, the SEC charged five traders with violating Rule 105 of Regulation M – short selling in connection with a public offering (Reg. M).  The traders agreed to pay a collective fine of nearly $750,000.  Reg. M prohibits purchasing securities in follow-on and secondary offerings when the purchaser has effected short sales in the securities […]

SEC Charges Men with Insider Trading on Information From Wives

Dear Friends, On March 31, 2014, the SEC announced the following charges against two men that traded on confidential information from their wives: Tyrone Hawk overheard his wife’s work calls indicating that her company, Oracle Corp., was planning to acquire Acme Packet Inc.  Hawk violated a duty of trust when he purchased Acme Packet shares prior to the acquisition and […]

SAC Capital: Hedge Fund Billionaire’s Baseball Dreams Fall Through

NY District Judge Richard Sullivan has signed off on a $900 million judgment, part of the $1.2 billion settlement reached by the SEC and hedge fund billionaire Steven Cohen. The settlement is the largest insider trading penalty in history. Cohen’s bid for the Oregon Ducks may fall through as a result. “The potential ownership market is too strong for baseball to keep […]

Hedge Funds: SEC Weekend Fraud Roundup

Following a plea deal struck in April, Oregon-based hedge fund manager Yusaf Jawed has been sentenced to six years in prison for defrauding investors of $37 million. Jawed plead guilty to 17 counts of mail and wire fraud and was ordered to pay $6.4 million in forfeitures, he paid a $34 million settlement to the SEC. The SEC charged a Manhattan-based independent […]

Read Steven Cohen’s SAC Capital Federal Indictment

SAC indictment document by CNBC