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SEC Charges Texas Hedge Fund Advisor With Fraud

New York (HedgeCo.net) – The SEC has filed a federal case against hedge fund advisor Stephen X. Kim and Spyglass Management, L.P. for their roles in allegedly defrauding Spyglass Capital Partners, L.P., a hedge fund managed by Kim through Spyglass, according to court filings.

The SEC complaint, filed in Texas, alleges that between in 2004 and 2006, Kim and Spyglass raised approximately $4.7 million from investors located primarily in Houston, Texas using offering materials that contained misleading information relating to Kim’s education, business experience, and compensation.

The SEC alleges that Kim and Spyglass failed to employ any hedging strategy to manage risk, causing the hedge fund to loose over $2 million then directing the hedge fund to make approximately $1.7 million in Ponzi payments to investors.

Finally, the SEC alleges that Kim misappropriated approximately $1.5 million of the hedge fund’s remaining assets to repay several outstanding personal obligations.

Without admitting or denying the allegations, Kim and Spyglass  made a  settlement with the SEC, pending the approval of the United States District Court for the Southern District of Texas.

Alex Akesson
Editor for HedgeCo.net
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One Response to SEC Charges Texas Hedge Fund Advisor With Fraud

  1. Anonymous says:

    Surprise, surprise, Hedge funds need to be subjected to the same accounting and auditing requirements as banks and investment firms, as well as adviser certification, since they take client money to invest and have become virtually indistinguishable from any other ordinary investment firm, but function in a secretive manner behind closed doors. Hedge funds are an invitation to fraud and theft while insisting that they be given carte blanche to function outside of the rules.

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