Eyewitness News – The chief operating officer of a hedge fund was sentenced Monday to one year probation and a $10,000 fine for a market manipulation scheme.

J. Douglas Schmidt, 40, of New York, was sentenced in U.S. District Court in Bridgeport for filing false statements with the Securities and Exchange Commission. He pleaded guilty last October and agreed to cooperate with authorities.

“It is our hope that this prosecution will send a message to hedge fund operators that the federal government is watching,” U.S. Attorney Kevin O’Connor said. “The failure to obey securities laws, especially by making false statements in SEC filings on which investors rely, is a serious crime. Violators will be vigorously prosecuted.”

Schmidt, chief operating officer of Durus Capital Management, LLC in Norwalk, admitted that in 2003 he filed the false statements on behalf of Durus that understated its holdings in biotechnology companies.

Schmidt has also agreed to forfeit $110,000 and pay a $65,000 fine to settle civil allegations brought by the SEC.

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