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Reuters UK – Amaranth Advisors, the largest collapsed hedge fund in history, has been ordered to pay $15 million in civil fines for attempting to manipulate natural gas markets, federal agencies said on Wednesday.
The Commodity Futures Trading Commission said it settled charges against Amaranth and the fund has been ordered to pay a $7.5 million civil fine.
The Business Insider – We’re eagerly awaiting the testimony of energy fund billionaire John Arnold before the Commodity Futures Trading Commission today, and not just for the obvious reasons.
Former Enron trader Arnold presumably became the second-youngest self-made billionaire in the country in part by exploiting the same speculation spree that two years ago caused gas prices to triple while world oil demand was actually falling.
Bloomberg – John Hyland, chief investment officer for the world’s largest exchange-traded fund in natural gas, said assertions that his company helped drive up energy prices were ‘’self-serving statistical gibberish.”
”Any time someone tells you that common sense tells you something, that just means they don’t have the data to support it,” Hyland said in testimony today before the Commodity Futures Trading Commission.
The Daily Advertiser – John Hyland’s funds control billions of dollars that flow in and out of energy markets, making him one of the biggest oil speculators in the world and also one of the biggest potential targets for federal regulators.
The 50-year-old Californian has been asked to appear before the Commodity Futures Trading Commission on Wednesday, where he will say that he isn’t the boogie man everyone’s looking for.
Bloomberg – The two main regulators of U.S. financial markets should merge, the chief executive of America’s largest options exchange says in remarks to be delivered to a congressional panel on Friday.
William Brodsky, CEO of the Chicago Board Options Exchange (CBOE), says in a written statement that there is a "compelling need for the merger" of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Reuters – The regulator of U.S. commodity markets said on Tuesday his agency’s weekly Commitments of Traders report will be revamped to include hedge fund positions for better transparency.
"Enhancing the quality of information in these weekly reports will better inform market participants and the public about the positions of the various types of traders," Gary Gensler, chairman of the Commodity Futures Trading Commission, said in a statement.
New York Times – The managing director of a collapsed Chicago hedge fund, Lake Shore Asset Management, was indicted by a federal grand jury. Prosecutors say the director, Philip J. Baker, operated a $300 million fraud.
The 27-count indictment was unsealed on Monday, said Patrick J. Fitzgerald, a United States attorney, in a statement on Tuesday. An arrest warrant has been issued for Mr. Baker, but his whereabouts are unknown, Mr. Fitzgerald said.
The Commodity Futures Trading Commission accused Mr. Baker in a civil lawsuit last year of having defrauded at least 700 investors by hiding trading losses. The commission won court orders banning Lake Shore from commodities trading.
Mr. Baker said that Lake Shore had a long history of trading success, though it lost about $38 million from 2002 to 2007, according to the indictment.
Globe and Mail – When Mark Bloom was arrested last week in New York for allegedly bilking clients of North Hills Fund, the case marked a new low in the hedge fund world.
Not just because Mr. Bloom had allegedly stolen $13.2-million (U.S.) from investors, sent false financial statements and lied repeatedly about the fund’s holdings. What really galled prosecutors was that Mr. Bloom had secretly invested client money in a Canadian-based hedge fund and then bitterly complained to regulators when the fund manager was charged with stealing money from investors, sending false financial statements and lying about the fund’s holdings.
Then, when a court-appointed receiver recovered the bulk of the money Mr. Bloom had invested in the Canadian fund, he managed to divert most of the money to himself.
"This action demonstrates the length to which unscrupulous individuals will go to defraud investors," said Stephen Obie, acting director of enforcement of the Commodity Futures Trading Commission (CFTC), which filed charges against Mr. Bloom along with the U.S. Attorney’s Office in New York.
New York (HedgeCo.Net) – Hedge fund manager Ray M. White and his company, CRW Management, LP, have been charged today by the Commodity Futures Trading Commission of swindling at least $10.9 million from over 250 investors through an alleged Ponzi scheme.
The complaint alleges that the Mansfield, Texas-based White, told investors their funds would be traded in the forex market and the strategy would reap returns of up to 416 percent annually.
Instead, White and CRW pocketed millions of dollars to fund a rampant spending spree which included homes, cars, Dallas Stars season tickets and the sponsorship of a drag racing team.
Out of the $10.9 million in initial capital they received, White and CRW used only $94,000 for forex trades. Ponzi schemes cease to work when new money coming in dries up; preventing the manager from paying back "returns" to anymore existing investors.
Christopher White and Hurricane Motorsports, LLC are also named by the CFTC as recipients of a portion of these funds in which they are not entitled to.
In the U.S. District Court for the Northern District of Texas, Judge Ed Kinkeade set the next hearing for March 11, while freezing assets and permitting the CFTC to seize records.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Marvin Cooper, who allegedly swindled deaf investors through his money management firm-turned Ponzi scheme, is maintaining his innocence despite new evidence uncovered Monday in federal court.
"Nobody’s been defrauded," Cooper’s attorney, Michael Glenn told the Honolulu Advisor. "We’re working on an amicable settlement in which the investors will get all their assets back."
According to papers filed by federal lawyers, Cooper, who ran Hawaii-based Billion Coupons Inc., may have been planning to hightail it to Panama after attempting to borrow $534,187 by putting his Kaimuki home up as collateral for a mortgage loan. Authorities believe the property was purchased with client funds.
Barry Fisher, the outside receiver appointed to take control of Cooper’s company by U.S. District Judge Michael Seabright, came to this conclusion after conducting a preliminary review of the business. Fisher also found an $80,000 check signed by Cooper which was to be used as a down payment for an $800,000 home in Panama, along with emails discussing his pending move.
Cooper, who is deaf, was charged last month by the Securities and Exchange Commission after allegedly raising $4.4 million by targeting investors in the U.S. and Japan Deaf communities. He then used about $1.4 million of those funds to purchase a new home and other personal expenses.
To gain the trust of investors, Cooper promised substantial returns from investments in Forex markets. Out of the millions, only $800,000 was actually used for Forex trading, with losses exceeding $750,000 from those trades. In typical Ponzi scheme fashion, new money coming in was then used to pay existing investors to keep up the appearance of steady returns. Cooper and BCI also have been hit with fraud charges brought on by the Commodity Futures Trading Commission.
"Being deaf and without the credentials required by the SEC and state regulators, Mr. Cooper focused on gaining access to deaf investors through feeder referrals, which were provided by other Deaf individuals with no investment background in exchange for a referral fee,” explains Joshua R. Beal, Managing Partner at investment advisor firm Schwarz Financial Services LLC. “He followed up with personal visits and calls over the video-phone where he promised returns of 15-25% a month based on automated computer trading programs."
Cooper approached Beal with a call over the videophone in 2007 when he was looking for advice regarding his investment firm. Beal suggested that he should register with the Securities and Exchange Commission; a piece of advice Cooper chose to ignore.
“In 2007 and 2008, several deaf clients of mine along with some community members started telling me that they were having success with Marvin,” Beal recalls. “I contacted the State of Hawaii and the SEC because he did not require a social security number, nor did he employ a custodian or provide a fee statement for his clients.”
Although in most Ponzi schemes, investors rarely receive their money back, authorities are confident that clients will receive some or all of their original investment back, after the assets are liquidated.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Idaho Falls resident Daren L. Palmer has been charged with operating a $40 million Ponzi scheme through his unregistered company, Trigon Group, according to the Commodity Futures Trading Commission.
Palmer is being charged with solicitation fraud and misappropriation of pool funds after it was discovered he used client funds for personal expenses and failed to register with the CFTC as a commodity pool operator.
According to the complaint, Palmer allegedly bilked $40 million from investors since at least September 2000, by promising returns of 7 percent monthly and 20 percent annually. From that $40 million, he only placed $4.5 million in his trading accounts.
“This is another unfortunate example of the maxim, ‘If it appears too good to be true, it probably is,’ said Stephen J. Obie, Acting Director of the CFTC.
Palmer fraudulently claimed he was a successful futures trader and that his pool had a successful track record. Palmer doctored false account statements as a means to keep up the appearance. He later admitted to using new capital coming in to pay off older investors, in a typical Ponzi scheme fashion.
Palmer withdrew about $25,000 to $35,000 per month and used the money to pay off credit card debt, build a new home, and purchase snowmobiles. Palmer’s next hearing is scheduled for April 23rd.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Two New York residents were charged yesterday by the Commodity Futures Trading Commission after allegedly misappropriating at least $553 million of client’s funds.
Stephen Walsh of Sands Point, NY and Paul Greenwood of North Salem, NY are being hit with futures fraud in connection with their companies, which include Westridge Capital Management Inc., WG Trading Investors, LP, and WGIA, LLC.
“Defendants treated investor money– some of which came from a public pension fund– as their own piggy bank to lavish themselves with expensive gifts,” said Stephen J. Obie, Acting Director of Enforcement for the CFTC.
According to the complaint, Walsh and Greenwood took approximately $1.3 billion from investors in their entities since 1996. The men allegedly told their clients that all of the funds would be employed in a single investment strategy of index arbitrage.
They then doctored false promissory notes to keep up the appearance to investors. In reality, the funds were transferred to another entity, where Walsh and Greenwood dipped into the cash for personal spending sprees which included horses, residences, and even an $80,000 teddy bear. It is estimated that they withdrew $160 million total for personal expenses.
The CFTC is seeking a statutory restraining order that will freeze their assets while preserving records.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
